In Notice 2017-12, the IRS clarifies that an IRS account transcript is a substitute for an estate closing letter. Estates and their authorized representatives can request an account transcript at no cost, by filing Form 4506-T, Request for Transcript of Tax Return.
Prior to June 1, 2015, executors, courts, state taxing departments, tax preparers and attorneys relied on the estate tax closing letter (Letter 627) to confirm that the IRS had either completed their examination of the estate tax return or closed their file.
After June 1, 2015, the IRS changed it’s policy and indicated that an estate tax closing letter would only be provided if requested and providing that the request was made four months after the filing of the estate tax return.
Notice 2017–12 now provides clarification for practitioners and others alike that we may use an account transcript as a substitute for a tax closing letter. The IRS notes that if an account transcript shows a transaction code of 421 and the explanation “Closed examination of tax return,” then this code can act as an equivalent of a tax closing letter.
Similar to an estate closing letter, an account transcript with a 421 code is not a formal closing agreement and as such does not prevent the IRS from reopening or re-examining an estate tax return as set forth in Rev. Proc. 2005-32. As set forth in the notice, and as provided in § 2010(c)(5)(B) and §§ 20.2010-2(d) and 20.2010-3(d), the IRS may examine the estate tax return of the decedent after issuance of a closing letter or 421 transcript for the purpose of determining the transfer tax liability of the surviving spouse or the decedent when portability has been elected.
Again, the IRS has indicated that a transcript may be obtained by filing a Form 4506-T, Request for Transcript of Tax Return. The request should be made no earlier than four months after the filing of the estate tax return.
In the notice, the IRS also has provided a phone number at the IRS – (866) 699-4083 to request an estate tax closing letter. The request should be made no earlier than four months after the filing of the estate tax return.
This new procedure should provide clarity and some peace of mind for accountants, estate attorneys, probate courts and personal representatives alike.
The following is for informational purposes only, shall not constitute legal advice and does not constitute the establishment of an attorney-client relationship. More importantly, the following information is not a substitute for a Board Certified Texas Estate Planning & Probate Attorney. You should always consult with a qualified attorney.