Automatic Estate Closing Letters No More: The IRS Changes its Procedures for Closing Estates

Closing letters are an important part of estate tax administration and provide great comfort to executors waiting to distribute assets to beneficiaries. To the dismay of many tax professionals, the IRS earlier this year announced that it would no longer automatically send out closing letters to signal the completion of an estate tax audit. For all estate tax returns filed on or after June 1, 2015, estate tax closing letters will be issued only upon request by the taxpayer. 

The IRS promised an alternative – a promise it finally delivered upon this month. On December 4th, the IRS published a new online procedure that provides executors and other estate representatives with a code on account transcripts that states, “Closed examination of tax return.” Transaction Code 421 tells professionals that an estate tax return has been accepted as filed or that an examination is complete. If the code does not appear, the IRS says tax return remains under review. 

For additional information on the new online procedures, including instructions on how to make an estate tax return transcript request, follow this link: https://www.irs.gov/irspup/Businesses/Small-Businesses-%26-Self-Employed/Transcripts-in-Lieu-of-Estate-Tax-Closing-Letters#tds. 

If you have an questions about the content of this article, please contact Anthony Daddino at (214) 749-2464.