The due date for filing returns with IRS and providing statements to beneficiaries under the rules requiring consistent basis reporting for inherited property for estate tax and income tax purposes, where the estate tax return of the decedent was filed after July 31, 2015, is Mar. 31, 2016, except with respect to decedents that died very recently.
Background. The executor or administrator of a decedent’s estate must file an estate tax return for the estate. (Code Sec. 6018(a)) If the executor or administrator is unable to make a complete return with respect to any part of the gross estate, he must include in his return all the information he has, including a description of such part and the name and address of every person holding a legal or beneficial interest in such part. If they are notified by IRS, such legal or beneficial owners must then file returns as to their parts of the estate. (Code Sec. 6018(b))
On Jul. 31, 2015, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41; the Act). Section 2004 of the Act enacted Code Sec. 6035, effective for property with respect to which an estate tax return is filed after Jul. 31, 2015.
Code Sec. 6035(a)(1) provides that the executor of any estate required to file an estate tax return under Code Sec. 6018(a) must furnish, both to IRS and the person acquiring any interest in property included in the decedent’s gross estate for federal estate tax purposes, a statement identifying the value of each interest in such property as reported on such return and such other information with respect to that interest as IRS may prescribe.
Under Code Sec. 6035(a)(2), each person required to file a return under Code Sec. 6018(b) must furnish, both to IRS and each other person who holds a legal or beneficial interest in the property to which such return relates, a statement identifying the information described in Code Sec. 6035(a)(1).
Code Sec. 6035(a)(3)(A) provides that each statement required to be furnished under Code Sec. 6035(a)(1) or Code Sec. 6035(a)(2) must be furnished at such time as IRS may prescribe, but in no case at a time later than the earlier of: (i) the date which is 30 days after the date on which the return under Code Sec. 6018 was required to be filed (including extensions, if any); or (ii) the date which is 30 days after the date such return is filed.
However, Notice 2016-19, 2016-9 IRB 362 and Reg. § 1.6035-2T(a) provide that executors and other persons required to file or furnish a statement under Code Sec. 6035(a)(1) or Code Sec. 6035(a)(2) before Mar. 31, 2016, need not do so until Mar. 31, 2016.
The Act also adds statements under Code Sec. 6035 to the list of information returns and payee statements subject to the failure to file correct information return/statement penalties under Code Sec. 6721 and Code Sec. 6722.
The form to be filed with IRS is Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent; that form must include a copy of each statement that is required to be furnished to beneficiaries. The beneficiary statement form is Schedule A of Form 8971.
Thus, the deadline to file Form 8971 with IRS, and Form 8971, Schedule A with beneficiaries, in the circumstances described above, is the end of this month. And nothing in the Code, regs, etc., provides for any extension of the due date. So, returns and statements that are due on Mar. 31 and not accurately filed by that date will be subject to the Code Sec. 6721 and/or Code Sec. 6722 penalties.