The American Institute of CPAs has sent comments to the Internal Revenue Service and the Treasury Department asking for changes in the IRS’s draft Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent, and draft instructions.
In its Jan. 29 letter, the AICPA suggested eight recommendations for consideration by the IRS. Among them, the AICPA asked for IRS to clarify that if IRS Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, is filed solely for electing portability, the Form 8971 is not required.
In addition, the AICPA said the IRS should allow processing of the form if “unknown” is an appropriate answer, so long as the form is accompanied by an explanation. That way, the form would not be considered incomplete, which could subject the estate to penalties for failure to file a correct Form 8971 by its due date.
The AICPA also suggested the IRS should ask if the estate tax value is used for income tax purposes, and the form should include the date of the previous supplemental filing. The Institute also said the instructions should include guidance on post Form 706 filing information needed by beneficiaries for determining basis.
The AICPA called on the IRS and the Treasury to issue additional guidance in order to ensure consistent basis reporting between estates and persons acquiring property from a decedent.
The AICPA urged the Treasury and IRS to immediately publish guidance to provide penalty relief if the executor acts in good faith and to provide reasonable cause penalty relief, clarify the time period (if any) that the executor has continuing responsibilities after providing the original statement, treat trusts as the beneficiary, provide a de minimis exemption to the information reporting rules for assets or groups of assets that are not publicly-traded and are of de minimis value, such as $3,000; and provide guidance and clarifications on other issues.
AICPA Tax Executive Committee chair Troy K. Lewis also praised the IRS’s decision to delay the due date for filing a new statement on basis reporting for estates. The IRS and the Treasury issued Notice 2015-57, delaying until Feb. 29, 2016 the due date for filing with the IRS and furnishing to the beneficiary the new Section 6035 statement regarding consistent basis reporting between estates and persons acquiring property from a decedent. “That provision would have applied the 30-day filing requirement to executors of estates of decedents and to other persons who are required under section 6018(a) or (b) to file a federal estate tax return (Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, or Form 706NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return for an estate of a nonresident not a citizen of the U.S.) if that return is filed after July 31, 2 015,” Lewis noted. “Without the extension granted in Notice 2015-57, the filings would have been due as early as August 30, 2015. The IRS Notice provided appropriate transition relief and time for IRS and Treasury to issue the needed guidance to taxpayers and practitioners.”