New Guidance Extends Portability Due Date

As discussed in our post on June 5, 2017, it is important to make a timely election for portability for estate and gift tax purposes, when a married individual dies with an estate valued under the current federal estate tax threshold ($5,490,000 for decedents who die in 2017), and there is a surviving spouse.

The IRS just issued Revenue Procedure 2017-34, which provides retroactive relief for estates that missed the due date for filing a federal estate tax return (Form 706) for the purpose of electing portability to a surviving spouse. (This retroactive relief only applies to returns solely filed for the portability election, and it does not apply to any other late-filed returns.)

The retroactive relief applies to decedents who died on or after January 1, 2011. (The portability election first became available on January 1, 2011.)  Such estates that missed the due date for the portability election can now file Form 706 on or before January 2, 2018 to make the portability election under this relief provision.

Without this relief provision, such estates would need to go through the expensive and time-consuming process of requesting relief through the private letter ruling process.

Practitioners should check to see if they have any clients that can benefit from this relief provision.