New Relief for Late “Portability” Elections

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On January 27, 2014, the Internal Revenue Service issued Rev. Proc. 2014-18 which provides a simplified method for certain taxpayers to obtain relief for an extension of time under Section 301.9100-3 of the Procedure and Administration Regulations to make a “portability” election under Section 2010(c)(5)(A) of the Internal Revenue Code.  Relief is available for estates of decedent’s who died in 2011, 2012, and 2013, provided certain eligibility and procedural requirements are satisfied.

            Rev. Proc. 2014-18 applies only if the taxpayer is the executor of an estate of a decedent who (i) has a surviving spouse, (ii) died after December 31, 2010, and on or before December 31, 2013, and (iii) was a citizen or resident of the Unites States on the date of death.  In addition, the taxpayer must not have been required to file an estate tax return pursuant to Section 6018(a) of the Code, and the taxpayer did not file an estate tax return with the time prescribed by Temporary Regulation Section 20.2010-2T(a)(1).

            To obtain relief pursuant to Rev. Proc. 2014-18, the following procedural requirements must be followed.  First, a person permitted to make the election on behalf of a decedent must file a complete and properly-prepared United States Estate (and Generation-Skipping Transfer) Tax Return (Form 706) on or before December 31, 2014.  Second, the Form 706 must state at the top that the return is being “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER SECTION 2010(c)(5)(A).”  If the requirements for granting relief pursuant to Rev. Proc. 2014-18 have been satisfied, the taxpayer will be deemed to have met the requirements for relief under Section 301.9100-3 and relief is granted under the provisions of Section 301-9100.3 to extend the time to elect portability under Section 2010(c)(5)(A).

            Estates that do not meet the eligibility requirements may still seek relief by filing a letter ruling request pursuant to Section 301-9100-3.

            For more information, please contact Jason Marx at (973) 535-0500 or email him at jmarx@connellfoley.com.