When it comes to dealing with the IRS, two things are certain: the power to collect taxes appears to be absolute absent some notable exceptions, and changes are always on the horizon. Indeed, there are a number of changes in store for taxpayers in 2016, but this post will focus on the upcoming change dealing with estate closing letters.
Next year, the IRS will no longer provide estate closing letters upon receipt of Form 706, a decedent’s estate tax return. The closing letter is important in informing the executor or representative that all of the estate’s tax obligations have been satisfied. With a closing letter, the executor is normally able to complete the disbursement of the estate.
Beginning in 2016, an executor or representative will have to specifically request a closing letter. In fact, such a letter will not be available for four to six months after the estate tax return has been filed. This essentially gives the IRS additional time to examine the return and determine whether mistakes have been made and if additional taxes must be paid.
An estate that does not receive a closing letter will likely receive a notice that the estate is being audited for a possible assessment. So as the old adage says, it may be good to let sleeping dogs lie. It may not be worth seeking a closing letter until it is absolutely necessary.
The change exemplifies the importance of having an experienced probate law attorney to help in the administration of your loved one’s estate. A skilled lawyer can help you understand which expenses can be deducted and how they may affect the overall value of the estate.