Filing and Penalty Relief for 2010 Estates Being Offered by IRS

The Internal Revenue Service (IRS) has announced that large estates of those who passed away in 2010 will be given until early 2012 to file required returns and pay estate taxes. Additionally, the IRS is offering penalty relief to beneficiaries on 2010 income tax returns.

With this decision, large estates, those with a value of $5 million or more, have more time to comply with tax changes that were made over the past year. For more information and to review revised versions of estate tax forms, visit IRS.gov.

The following relief is being offered by the IRS:

Any large estate that is opting out of the estate tax will not be required to file Form 8939 until Tuesday, Jan. 17, 2012. In the past, this form was due on November 15, 2011. It is not necessary to file any additional form or statement for this due date to apply – it is not an extension, but rather a simple change to the due date.

Any 2010 estate that is requesting an extension via Form 4768 will have until March 2012 to pay any estate tax and to file the appropriate returns. Generally speaking, a six month extension is granted to estates that file this form. However, extensions are only granted if there is a good cause. For this reason, the majority of 2010 estates that file Form 4678 on time will be given until March 19, 2012 to file Form 706-NA or Form 706. For estates of those dying between December 16, 2010 and January 1, 2011, the due date is 15 months after the date of the death. There is no late payment or late filing penalties, but interest can still be charged on estate tax that was not paid by the original due date.

Those who already filed a 2010 federal income tax return or obtained an extension, including individuals, trusts, and estates, may be eligible for special penalty relief. Negligence and late payment relief is for those inheriting property from somebody who passed on in 2010, who then sold the property during 2010 but inaccurately reported a loss or gain as they were unaware of whether the carryover basis election was made.