FAAs, LMs, GCMs & Notices
NumberSubject
Notice 2017-12Guidance Relating to the Availability and Use of an Account Transcript as a Substitute for an Estate Tax Closing Letter
Letter 2016-003Letter explaining the § 2010 unified credit.
Notice 2016-19Date for Compliance with Consistent Basis Reporting Between Estate and Person Acquiring Property from Decedent
Notice 2015-38Designation of Private Delivery Services
Notice 2007-90This notice provides interim guidance and describes a change in Internal Revenue Service policy regarding section 6166 of the Internal Revenue Code, Extension of Time for Payment of Estate Tax Where Estate Consists Largely of Interest in Closely Held Business.
FAA 20152201FI.R.C. § 6501(c)(9) Exception to Statute of Limitations
LM 201429023Proper Method for Calculating the Amount Available for Refund under Section 6511(b)(2)
FAA 20124602FProtective Claim Language (Corporate Tax)

Specific IRS Written Determinations around 6166 have UILC 6166.xx-xx

Information Letters

An Information Letter provides general statements of well-defined law without applying them to a specific set of facts. They are provided by the IRS National Office in response to requests for general information by taxpayers, by congress-persons on behalf of their constituents, or by congress-persons on their own behalf.  (Note: Information letters are advisory only and have no binding effect on the IRS.)

Searchable list of information letters available here.

GAO Report on the Use of Appraisals
Estate Tax, Gift Tax, and Income Tax Returns
 
In June 2012 the GAO released a report  - GAO-12-608 (PDF) - analyzing taxpayers' use of appraisals on estate tax, gift tax, and income tax returns, and compared the frequency with which appraisals were used with the frequency of examinations or audits reviewing the appraisals. Data was drawn primarily from the 2009 filing year. Perhaps not surprisingly, the highest frequency of appraisal use and review was with estate tax returns. On the other hand, only a low percentage of gift tax returns used appraisals. The audit rate for gift tax returns with appraisals was higher than the audit rate for gift tax returns without appraisals, but there was no difference in audit rates for estate tax or income tax returns (non-cash charitable contributions) with or without appraisals.

 

Why GAO Did This Study 

Misstated appraisals used to support tax returns have long caused concern. In 2006, Congress adopted the Pension Protection Act, which changed the criterion for when appraisals are considered to be substantially misstated and created a penalty for improper appraiser practices and qualifications for appraisers with respect to noncash charitable deductions. The Tax Technical Corrections Act of 2007 extended the penalty for misstated appraisals to estate and gift taxes. Among its objectives, GAO was asked to (1) describe the extent to which individual, estate, and gift tax returns are likely to involve an appraiser and the extent to which IRS audits them; (2) describe how IRS selects returns likely to involve appraisals for compliance examinations, and assess whether the current appraisal threshold is useful; and (3) assess IRS procedures for ensuring that its appraisal experts are qualified. To accomplish these objectives, GAO analyzed IRS data, reviewed IRS guidance, and interviewed appropriate IRS officials.

What GAO Recommends

GAO recommends that IRS develop a comprehensive quality review program for Art Appraisal Services (AAS) and establish appraisal training requirements specifically for AAS staff. Congress also should consider raising the dollar threshold at which qualified appraisals are required for noncash contributions to reflect inflation. IRS agreed with our recommendations.

Tax Policy Center Estimate of Estate Tax Returns and Liability Under Current Law 2011-2022
On Jan-09-2013 the Tax Policy Center released its estimate of the number of estate tax return filings under current law (ATRA of 2012) for the years 2013 - 2022. A link to the Tax Policy Center web site is provided here, and links to the following 3 PDF files are available below:
 

T13-0019 - Estate Tax Returns and Liability Under Current Law and Various Reform Proposals, 2011-2022

T13-0020 - Current Law Distribution of Gross Estate and Net Estate Tax by Size of Gross Estate, 2013

T13-0021 - Current Law Distribution of Gross Estate and Net Estate Tax by Size of Gross Estate, 2022

Reg. 601.504(b) - Power of Attorney

§ 601.504 Requirements for filing power of attorney.

(a) Situations in which a power of attorney is required. Except as otherwise provided in § 601.504(b), a power of attorney is required by the Internal Revenue Service when the taxpayer wishes to authorize a recognized representative to perform one or more of the following acts on behalf of the taxpayer -

(1) Representation. (See §§ 601.501(b)(10) and 601.501(b)(13).)

(2) Waiver. Offer and/or execution of either

(i) A waiver of restriction on assessment or collection of a deficiency in tax, or

(ii) A waiver of notice of disallowance of a claim for credit or refund.

(3) Consent. Execution of a consent to extend the statutory period for assessment or collection of a tax.

(4) Closing agreement. Execution of a closing agreement under the provisions of the Internal Revenue Code and the regulations thereunder.

(5) Check drawn on the United States Treasury. The authority to receive (but not endorse or collect) a check drawn on the United States Treasury must be specifically granted in a power of attorney. (The endorsement and payment of a check drawn on the United States Treasury are governed by Treasury Department Circular No. 21, as amended, 31 CFR part 240. Endorsement and payment of such check by any person other than the payee must be made under one of the special types of powers of attorney prescribed by Circular No. 21, 31 CFR part 240. For restrictions on the assignment of claims, see Revised Statute section 3477, as amended (31 U.S.C. 3727).)

(6) Signing tax returns. The filing of a power of attorney does not authorize the recognized representative to sign a tax return on behalf of the taxpayer unless such act is both -

(i) Permitted under the Internal Revenue Code and the regulations thereunder (e.g., the authority to sign income tax returns is governed by the provisions of § 1.6012-1(a)(5) of the Income Tax Regulations); and

(ii) Specifically authorized in the power of attorney.

(b) Situations in which a power of attorney is not required -

(1) Disclosure of confidential tax information. The submission of a tax information authorization to request a disclosure of confidential tax information does not constitute practice before the Internal Revenue Service. (Such procedure is governed by the provisions of section 6103 of the Internal Revenue Code and the regulations thereunder.) Nevertheless, if a power of attorney is properly filed, the recognized representative also is authorized to receive and/or inspect confidential tax information concerning the matter(s) specified (provided the power of attorney places no limitations upon such disclosure).

(2) Estate matter. A power of attorney is not required at a conference concerning an estate tax matter if the individual seeking to act as a recognized representative presents satisfactory evidence to Internal Revenue Service officials that he/she is -

(i) An individual described in § 601.502(b); and

(ii) The attorney of record for the executor, personal representative, or administrator before the court where the will is probated or the estate is administered.

(3) Bankruptcy matters. A power of attorney is not required in the case of a trustee, receiver, or an attorney (designated to represent a trustee, receiver, or debtor in possession) appointed by a court having jurisdiction over a debtor. In such a case, Internal Revenue Service officials may require the submission of a certificate from the court having jurisdiction over the debtor showing the appointment and qualification of the trustee, receiver, or attorney and that his/her authority has not been terminated. In cases pending before a court of the United States (e.g., U.S. District Court or U.S. Bankruptcy Court), an authenticated copy of the order approving the bond of the trustee, receiver, or attorney will meet this requirement.

(c) Administrative requirements of filing -

(1) General. Except as provided in this section, a power of attorney (including the declaration of representative and any other required statement(s)) must be filed in each office of the Internal Revenue Service in which the recognized representative desires to perform one or more of the acts described in § 601.504(a).

(2) Regional offices. If a power of attorney (including the declaration of representative and any other required statement(s)) is filed with the office of a district director or with a service center which has the matter under consideration, it is not necessary to file a copy with the office of a regional commissioner which subsequently has the matter under consideration unless requested.

(3) National Office. In case of a request for a ruling or other matter to be considered in the National Office, a power of attorney, including the declaration of representative and any other required statement(s), must be submitted with each request or matter.

(4) Copy of power of attorney. The Internal Revenue Service will accept either the original or a copy of a power of attorney. A copy of a power of attorney received by facsimile transmission (FAX) also will be accepted.

(d) Practice by correspondence. If an individual desires to represent a taxpayer through correspondence with the Internal Revenue Service, such individual must submit a power of attorney, including the declaration of representative and any other required statement(s), even though no personal appearance is contemplated.

[56 FR 24007, May 28, 1991; 57 FR 27356, June 19, 1992]

IRS Internet Resources

The following items are among those available on the IRS website.

The redacted IRS guide for internal use, Document 6209, IRS Processing Codes and Information, is available to the public for the past 7 or 8 publication years. This document contains the Transaction Codes used on tax account transcripts and a wealth of other information. It explains, for example, how the Document Locator Number (DLN) is constructed and the categories to which the groups of digits in the DLN refer.

Transaction Codes often encountered on estate tax return transcripts include the following (arranged in the chronological order in which they might occur) :

670Payment with Form 4768 before the return is filed, or a payment subsequent to the return filing, e.g. an annual payment on a section 6166 anniversary date.
150Tax assessed when the original return is filed.
610Payment submitted with the original return. Sometimes posted with §6166 anniversary date payments instead of the appropriate TC 670.
340Manually computed interest assessment in 6166 cases, inter alia. (Section 6166 interest amounts are not automatically generated by the IRS computer system.) TC 340 is always associated with a TC 290 for zero on an IRS transcript in a normal §6166 case - the TC 290 zero is a clearing function for the computer system so that the TC 340 amount will post.
290Posting with a dollar amount indicates a Campus tax assessment (increase) in response to either a math error correction during the original return processing or a supplemental return reporting a tax increase. This can occur before field examination activity has been completed.
291A tax decrease assessed at a Campus. This generally will not occur before the examination of the original return has been completed because the account will show an unreversed TC 420 (the Examination Activity Code indicator which is assigned to every estate tax return). See e.g. Estate of Shapiro v. U.S.,111 F. 3rd 1010. Supplemental returns received before an examination has been completed will be forwarded by Campus to the examining IRS Estate Tax Attorney for consideration.
300Tax assessment (increase) resulting from a field examination. Will post with zero in a No Change or No Change With Adjustment examination case.
301Tax assessment (decrease) resulting from a field examination.
976A supplemental return filing. A dollar amount posted indicates a payment with the supplemental return.
166Computer generated §6651(a)(1) failure to file penalty - TC 160 if manually computed. Reversed by TC 167 or TC 161.
276Computer generated §6651(a)(2) failure to pay penalty - TC 270 if manually computed. Reversed by TC 277 or TC 271.
240Manually computed Miscellaneous Penalty. Used for §6166(g)(3) late payment penalty assessments and §6662(b)(5) estate or gift tax valuation understatement penalty assessments, among others. The TC 240 penalty assessment for a §6166(g)(3) failure to pay principal or interest is automatically reversed - abated - by TC 241 when an estate fails to make payment within 6 months of the date on which such payment was due, because the estate loses its §6166 election. The §6166(g)(3) penalty applies only if the estate keeps its §6166 election.

Note: Failure to make payment does not automatically terminate a §6166 election; the IRS must first issue a final Notice and Demand for payment. Under normal procedures, a notice and demand for payment is sent every 45 days during the 6-month period in which an estate can save its §6166 election (by paying the past-due installment plus penalties and interest). By the 180th day the final notice and demand for payment would be sent with a specific payment deadline, after which the section 6166 account would be accelerated; the payment deadline specified in that letter would be the date on which the election is terminated under section 6166(g)(3). See United States v. Godley, 3:13-cv-549-RJC-DCK, W.D.N.C., Sep-30-2015.

If for some reason the IRS fails to send the final Notice and Demand until well beyond the 180th day, the estate's §6166 election would remain in effect until the acceleration date specified in that final Notice and Demand.

Forms 706 and Forms 709 and their instructions - and IRS Publications - are available for the current year, as well as for prior years going back to, for example, 1993 for Form 706 or 1962 for Form 706-NA, or back to 1955 for Form 709. 

Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes, is used to request an extension of time to file the estate tax return, and also to request an extension of time to pay the estate tax (a separate request must be made on the Form for each type of extension). Form 4768 can also be filed to request an extension of time to pay an annual installment due under a section 6166 deferral. NOTE: IRS Collection Advisory approves a request for extension of time to pay. If a section 6324A lien was not previously recorded for the 6166 deferral, Advisory may very likely require that a lien or a bond be filed in order to grant the extension of time to pay the annual installment. The Instructions for Form 4768 are also available on the IRS website.

The Internal Revenue Manual (IRM) is available, with most of the Parts from 1 through 39. Part 4.25.1 contains detailed instructions for field examinations of estate tax returns, and Part 4.25.2 contains detailed processing instructions for Cincinnati Campus personnel who handle estate tax returns, including section 6166 deferral cases.

A page captioned SOI Tax Stats has links to various articles and analyses of estate and gift tax return filings.

Documents
Tax Statistics