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Can You Request An Extension To File A Federal Estate Tax Return?

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The Estate Tax Returns in 2011 - Can Your Get An Extension To File A Return?

Can You Get An Extension To File A Federal Estate Tax Return (Form 706)?

In 2010 there is no federal estate tax and the IRS is not currently accepting the form 706.

In case you’re wondering why anyone would file an estate tax return when there is no estate
tax, that’s another story for another time.  But, in just a few more weeks the federal estate tax will come
back with a vengeance.

On January 1, 2011, the IRS will again begin accepting estate tax returns for descendants dying after
that date.  And, they will be taxing your estate (including life insurance) for every dollar over $1 million.
Additionally, the tax rate will return to a top marginal rate of 55%.

Many clients find, that because of the complexities of the estate, or the lack of ability to get accurate
appraisals, or because of a lack of clear record keeping by an aging relative, that hey are not in a position to file the return
within the nine months permitted by law.  The good news is, that there is also a provision for an automatic extension of up to six months.

Note, that this extension is merely to file a return and is not an automatic extension of time to pay the tax.  In addition, a federal court recently
held that the IRS failed to grant an additional extension (when the extension was requested after the due date for the return).  However,
there are a number of important limitations cited in this case.  But, this ruling  in favor of the tax payer might give you a basis for
requesting an extension other than the automatic extension of six months.

In any case, file requests for extension in a timely manner to avoid the litigation costs experienced by the estate in this case.

To review the case and the federal courts ruling on extensions to file a federal estate tax return, click here.

David M Frees focuses his practice in the areas of trusts and estates, and probate.  He also works with many closely held

family businesses in the areas of succession planning and asset protection planning. 610-933-8069

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