Will IRS closing letters be hard to come by?
If you are the executor to a loved one’s estate, you are likely very familiar with the obligations of seeing that all debts and liabilities are paid before distributing property. One of the most common possible debts to an estate are taxes that may be applicable depending on the size of the estate.
As you may well know, estates valued at $5.43 million or more are subject to a federal estate tax. However, there may be deductions that may lower the taxable value of the estate such that federal taxes may not apply.
Nevertheless, a tax return is required on every estate that is probated. But one of the essential procedural hurdles that must be completed is the IRS’ evaluation of the tax return. This is commonly culminated with a closing letter that informs the representative that all federal tax obligations (if any) have been satisfied. Closing letters are commonly produced automatically when the review of an estate tax return is completed.
However, in 2016 the IRS will change course on issuing closing letters. According to a recent article, the IRS will only provide closing letters upon request. The availability of these letters will not be automatic either. It is estimated that it will take four to six months after the tax return is filed for such a letter to be available. Ostensibly this gives the IRS a great deal of time to review the return in order to make assessments as needed.
If you have questions about how this change may affect the administration of a loved one’s estate, an experienced probate law attorney can help.