What’s New for Estate and Gift Tax

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By: Katelyn Allen, Nutter

IRS Issues Final Regulations that Establish $67 User Fee for Persons Requesting Issuance of Estate Tax Closing Letter.

TD 9957: Effective Date: October 28, 2021

            With the issuance of TD 9957, effective October 28, 2021, the IRS effectively established a $67 user fee for persons requesting the issuance of an IRS Letter 627, also known an as estate tax closing letter.

            All estates filing returns after the October 28, 2021 implementation date are required to request the issuance of an estate tax closing letter and pay the $67 user fee through the federal government fee payment portal, www.pay.gov.  In navigating the payment portal, the person authorized to request an estate tax closing letter will first select the agency (Department of the Treasury: Internal Revenue Service) and will then select “Estate Tax Closing Letter User Fee”. 

            The requestor will be required to submit an online form on the pay.gov portal, providing the decedent’s information, the executor’s information, and the amount of tax due as reflected on the Form 706 or Form 706-NA filed with the IRS. Once the information has been entered and the form has been submitted, the requestor must pay the user fee.  The user fee can currently be paid by credit or debit card, PayPal account, Amazon account, or via an ACH transfer from a private bank account.  The IRS specifically states that a requestor should not submit the online form or pay the user fee until nine months after the date of filing.

National Archives and Records Administration (NARA)’s Federal Records Centers reduces 75-Year Retention Period for Estate Tax Returns to 40 Years.

            Effective February 11, 2022, the National Archives and Records Administration (NARA)’s Federal Records Centers will reduce the current period of 75 years for retention of estate and gift tax returns to 40 years. 

            The NARA has indicated that the ultimate goal for the government-wide policy change is to transition federal record keeping to fully electronic, as well as reduce the volume of records stored and the storage costs for these records.

            Taxpayers are encouraged to request copies of older estate and gift tax returns in advance of the February 11, 2022 deadline.  Once the National Archives and Records Administration approves the shorter retention period, the IRS will be instructed to destroy estate and gift tax returns in the Federal Records Centers that are older than 40 years.

            In order to request a copy of an older estate and/or gift tax return, the requestor must have authorization to receive a copy of the return on behalf of the estate, in the case of an estate tax return.  The requestor must submit a completed Form 4506 (Request for Copy of Tax Return), provide the decedent’s name, address, and social security number, a copy of the decedent’s death certificate, and prove a fiduciary relationship through either a copy of Letters Testamentary approved by the court or a completed Form 56 (Notice Concerning Fiduciary Relationship).  The payment of a fee of $50 for each return requested is also required.