The IRS issued final regulations instituting a user fee of $67 for the Service to issue an estate tax closing letter.
The final regulations, issued in late September, adopted without significant change proposed regulations issued in late December 2020 (REG-114615-16).
An estate tax closing letter informs its authorized recipient of the IRS's acceptance of the estate tax return (generally, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) and provides some return information, such as the amounts of the net estate tax, any state death tax credit or deduction, and any generation-skipping transfer tax for which the estate is liable.
Formally known as IRS Letter 627, an estate tax closing letter was previously issued free of charge. Prior to June 2015, the letters, although not mandated by any statute, were automatically issued upon closing of every estate tax return filed. Since then, they have been issued only upon request. That change was prompted by the number of estate tax filings having dramatically increased after late 2010, when the "portability" provision in Sec. 2010(c) was enacted.
Portability allows a deceased spousal unused exclusion (DSUE) amount to be added to the basic exclusion amount of the decedent's surviving spouse. Since 2010, many or most estate returns are filed for the purpose of establishing the DSUE amount and report no tax due. During the same time, the IRS's available resources and budget were stretched, the proposed regulations' preamble stated. Because of these constraints and the letters' purpose as a convenience to authorized persons, the IRS determined that charging a user fee is appropriate. The amount of $67 was arrived at by estimating direct and indirect costs under Office of Management and Budget policies and guidelines.
The fee applies to requests for estate tax closing letters received by the IRS on or after Oct. 28, 2021.
- T.D. 9957
— By Paul Bonner, a JofA senior editor.
