How to Close an Estate with the IRS: A Comprehensive Guide

Closing an estate with the Internal Revenue Service (IRS) involves several steps and requirements. This guide will provide a comprehensive overview of the process, including the necessary documentation, timelines, and payment procedures. By understanding the specific steps and requirements, you can ensure a smooth and efficient estate closing process.

Step 1: Gather Necessary Documentation

The first step in closing an estate with the IRS is to gather all necessary documentation. This includes:

The decedent’s will or trust: This document outlines the decedent’s wishes regarding the distribution of their assets and the appointment of an executor or administrator.
Death certificate: This document provides proof of the decedent’s death.
Social Security number: This number is used to identify the decedent and their estate.
Estate tax return (Form 706): This form is used to report the value of the decedent’s estate and calculate any estate taxes owed.
Proof of payment: This documentation shows that any estate taxes owed have been paid.

Step 2: File the Estate Tax Return

The estate tax return (Form 706) must be filed with the IRS within 9 months of the decedent’s death. The return must be filed even if no estate taxes are owed.

Step 3: Pay Any Estate Taxes Owed

If the value of the decedent’s estate exceeds the applicable exemption amount, estate taxes may be owed. These taxes must be paid to the IRS before the estate can be closed.

Step 4: Request an Estate Tax Closing Letter

Once the estate tax return has been filed and any taxes owed have been paid, you can request an Estate Tax Closing Letter from the IRS. This letter verifies that the estate has been closed and that no further taxes are owed.

Timelines

The following timelines apply to the estate closing process:

Filing the estate tax return: The estate tax return must be filed within 9 months of the decedent’s death.
Paying estate taxes: Any estate taxes owed must be paid within 9 months of the decedent’s death.
Requesting an Estate Tax Closing Letter: You can request an Estate Tax Closing Letter once the estate tax return has been filed and any taxes owed have been paid.

Payment Procedures

Estate taxes can be paid using the following methods:

Electronic Federal Tax Payment System (EFTPS): This is the preferred method for paying estate taxes.
Check or money order: Checks or money orders should be made payable to the “United States Treasury.”
Credit or debit card: Estate taxes can be paid using a credit or debit card through the IRS website.

Additional Information

In addition to the steps outlined above, there are a few other things to keep in mind when closing an estate with the IRS:

You may need to hire an attorney or accountant: If the estate is complex, you may need to hire an attorney or accountant to help you with the closing process.
Keep records of all transactions: It is important to keep records of all transactions related to the estate, including receipts for expenses and proof of payments.
Be patient: The estate closing process can take several months or even years to complete.

By following the steps outlined in this guide, you can ensure a smooth and efficient estate closing process.

Probate 101: Filing Estate Tax Returns

FAQ

How long does it take for the IRS to close an estate?

According to the IRS website, heirs can expect a closing letter within four to six months from the date Form 706 is filed.

How do I get an IRS closing letter for an estate?

For those who wish to continue to receive estate tax closing letters, estates and their authorized representatives may call the IRS at (866) 699-4083 to request an estate tax closing letter no earlier than four months after the filing of the estate tax return.

How do I contact the IRS about an estate?

Many general estate and gift tax law questions can still be answered by calling: 800-829-1040. You may also find many answers to your questions by visiting Forms and Publications.

Do all estates have to file Form 706?

An estate tax return (Form 706) must be filed if the gross estate of the decedent (who is a U.S. citizen or resident), increased by the decedent’s adjusted taxable gifts and specific gift tax exemption, is valued at more than the filing threshold for the year of the decedent’s death, as shown in the table below.

How do I get an estate tax closing letter?

Executors or trustees may request – and pay for – an estate tax closing letter at www.pay.gov. Search for “estate tax” or “closing letter.” Be prepared to provide the decedent’s name, Social Security number, date of death, and address. The executors’ and/or trustees’ names and addresses are required as well.

Can the IRS re-examine an estate tax closing letter?

Executors and trustees should consult their respective state agencies to request a letter in addition to the federal one through the IRS. Also be aware that simply because an estate tax closing letter has been issued, the IRS can still re-examine the estate. The letter is not a closing agreement or a promise not to reopen Form 706.

Do I need a closing letter if my estate owes taxes?

The closing letter allows an estate to settle and close probate. The estate can’t do so until any issues of estate taxes have been resolved if the estate is large enough to owe them. The requirement to file Form 706 and receive a closing letter depends on the gross estate value. The IRS has changed this value over the years.

How much does an estate tax closing letter cost?

Final regulations establishing a new user fee of $67 for persons requesting the issuance of IRS Letter 627, Estate Tax Closing Letter (ETCL) became effective October 28, 2021 (User Fee for Estate Tax Closing Letter ( TD 9957 PDF )). How do I request an Estate Tax Closing Letter on or after October 28, 2021? Is there help at Pay.gov?