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IRS Hints at a Permanent Safe Harbor for Missed Portability Elections

By Anthony P. Daddino, P.C. on June 15, 2015

IRS Hints at a Permanent Safe Harbor for Missed Portability Elections

Earlier this week the IRS issued final rules on portability. Portability allows the surviving spouse to essentially inherit the portion of the decedent’s estate-tax exclusion amounts (currently $5,430,000) that went unused.    To effectuate the transfer, an election must be made on a filed estate tax return.   Unfortunately the need for this election is often discovered too late for estates below the filing threshold which did not file an estate tax return.  These estates are forced to seek a private letter ruling from the IRS to request additional time to make the election – a sometimes costly endeavor.   While the IRS previously offered automatic extensions for smaller estates to make the necessary election, such relief only applied to decedents dying on or before December 31, 2013.   See Rev. Proc. 2014-18.   The IRS announced earlier this week, however, that it is considering extending such relief and offering a permanent method by which smaller estates can fix missed portability elections.  Stay tuned as we continue to monitor the IRS’ actions in this area.