Initial Filings for Forms 8971 Now Pushed Back to June 30, 2016 as IRS Grants Additional Delay

The initial due date for filing Forms 8971 has been pushed back for the third (and likely final) time by the IRS in Notice 2016-27.  The notice provides that both the statements to be furnished to the IRS (Forms 8971 and the Schedule As) and those to be provided to the beneficiaries (Schedule A) that are due prior to June 30, 2016 need not be provided to the IRS or the beneficiaries prior to that date.

The form is required to be filed by executors of estates who are required to file a return (as that term is defined in the proposed regulations issued in early March of 2016) if that return is filed after July 31, 2015.  The return is due 30 days after the earlier of the date the Form 706 is filed or when it was required to be filed (including extensions actually granted).  [IRC §6035 as added by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015]

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Tax Analysts Reports IRS Again Delays Due Date for First Forms 8971

Tax Analysts reported this afternoon that the IRS has delayed to June 30, 2016 (via Notice 2016-27) the due date for the initial batch of Forms 8971 from the March 31, 2016 date last set in Notice 2016-19.  The form is required to be filed by taxable estates that filed a Form 706 after July 31, 2015.  The form is due 30 days after the Form 706 is filed or by June 30, 2016, whichever is later.

The AICPA had requested that the IRS delay this date to give additional time to understand the proposed regulations issued earlier this month that are meant to guide the preparation of this form.

More information, including a link to the Notice, will be posted here once the IRS posts the Notice on their site.

Proposed Regulations on Which Taxpayers May Rely Issued to Deal with Form 8971 and Consistent Basis Rules

March 23 Update:  The IRS has announced in Notice 2016-27 that the first forms will now be due on June 30, 2016, and not March 31, 2016 as originally provided in Notice 2016-19 that accompanied these proposed regulations.

Coming up on the second extended due date for the first filings of Form 8971, the “consistent basis reporting” form required to be filed by estates that filed a Form 706 that showed tax due after July 31, 2015 that would have been due on or before March 31, 2016, the IRS has released proposed regulations (REG-127923-15) and a temporary regulation (TD 9757) that provide guidance for the initial filings, as well as other filings due before the publication of final regulations.

In the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 Congress added new IRC §6035.  The provision imposed two reporting mandates on estates in order to prevent estates from paying estate tax based on one claimed value and then later having heirs claim a higher basis in the asset for income tax reporting, arguing that the estate’s value was in error or, more likely, just betting that the IRS would never actually discover the discrepancy.

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IRS Delays Due Date for Basis Statements One Additional Month to Allow for Publication of Proposed Regulations

The IRS delayed the due date for filing the first Forms 8971 in Notice 2016-19.  Previously in Notice 2015-57 the IRS had delayed the date for initial filings of any return due prior to February 29, 2016 to February 29, 2016. 

The IRS has pushed that date back by one month in this ruling, along with the required notices to beneficiaries.  

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Due Date for Basis Statement Required Under STVHCIA By Estates Filing Form 706 Delayed to February 29, 2016

One significant tax law change contained in the Surface Transportation and Veterans Health Care Improvement Act of 2015 (STVHCIA) was the uniform reporting of basis for inherited assets.  The act added IRC §6035 to require that an estate required to file an estate tax return must provide information to the IRS and beneficiaries regarding the basis reported. 

Generally, the information must be provided to the IRS no later than by the earlier of 30 days after the date the Form 706 was required to be filed (including extensions, if any are granted) or 30 days after the Form 706 is actually filed by the estate.  The law does authorize the IRS to move that date forward.  The requirement applied to any estate that filed a return after July 31, 2015—which was the day this bill was signed into law.

In Notice 2015-57 the IRS has pushed the due date forward to February 29, 2016 for statements that would be due prior to that date under the 30 day rule found in the new law.

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