[Federal Register Volume 66, Number 143 (Wednesday, July 25, 2001)]
[Rules and Regulations]
[Pages 38544-38547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18417]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 20 and 602

[TD 8957]
RIN 1545-AX98


Estate Tax Return; Form 706, Extension to File

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document contains final regulations relating to the 
filing of an application for an automatic 6-month extension of time to 
file an estate tax return (Form 706). The final regulations provide 
guidance to executors of decedents' estates on how to properly file the 
application for the automatic extension.

[[Page 38545]]


DATES: Effective Date: These regulations are effective July 25, 2001.
    Applicability Date: For dates of applicability, see Secs. 20.6075-1 
and 20.6081-1(e).

FOR FURTHER INFORMATION CONTACT: Mary Berman, (202) 622-3090 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in these final regulations 
has been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) under control number 1545-1707. The collection of information 
in these final regulations is in Sec. 20.6081-1. To receive an 
extension of time to file an estate tax return, the executor of a 
decedent's estate must file Form 4768, ``Application for Extension of 
Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping 
Transfer) Taxes.'' This information is required to obtain a benefit (an 
automatic 6-month extension of time to file an estate tax return). The 
collection of information is mandatory if the extension is requested. 
The likely respondents are executors of decedents' estates.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    The reporting burden contained in Sec. 20.6081-1 is reflected in 
the burden of Form 4768.
    Comments concerning the accuracy of this burden estimate and 
suggestions for reducing this burden should be sent to the Internal 
Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S:O, 
Washington, DC 20224 and to the Office of Management and Budget, Attn: 
Desk Officer for the Department of the Treasury, Office of Information 
and Regulatory Affairs, Washington, DC 20503.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax information are confidential, as required by 26 U.S.C. 6103.

Background

    On October 20, 2000, the IRS published in the Federal Register (65 
FR 63025) a notice of proposed rulemaking (REG-106511-00) relating to 
the filing of an application for an automatic 6-month extension of time 
to file Form 706, ``United States Estate (and Generation-Skipping 
Transfer) Tax Return.'' This document adopts final regulations with 
respect to that notice of proposed rulemaking. Written comments were 
received with respect to the proposed regulations, and a public hearing 
was held on January 24, 2001. A summary of the principal comments 
received is provided below.
    In general, under the proposed regulations the executor of a 
decedent's estate is allowed an automatic 6-month extension of time to 
file Form 706 beyond the 9 months provided for by section 6075(a). The 
application for the automatic extension must be submitted on Form 4768. 
The application must be filed with the IRS on or before the date 
prescribed by section 6075(a) for filing the Form 706, and it must 
include an estimate of the full amount of tax due.
    The proposed regulations refer to ``the person who is required to 
file the return'' as the person who may request an extension of time to 
file. Since Sec. 20.6018-2 of the Estate Tax Regulations requires that 
the return be filed jointly by all executors in situations in which 
there is more than one executor, one commentator pointed out that ``the 
person who is required to file the return'' could be interpreted as 
meaning that all executors must sign the request for an extension of 
time to file in situations in which there is more than one executor.
    Also, the Treasury Department and the IRS recognize that ``the 
person who is required to file the return'' may be interpreted to mean 
that only an executor may sign a request for an extension to file. 
However, as indicated on Form 4768, the request may be signed by an 
attorney, certified public accountant, or enrolled agent authorized by 
the executor, or by an authorized agent holding a power of attorney.
    In response to the comment, the quoted language in the proposed 
regulations has been deleted from the final regulations. Also, the Form 
4768 will be revised to clarify that it is only necessary for one 
executor to sign the request for an extension of time to file in 
situations in which there is more than one executor.
    Two commentators suggested that the final regulations clearly 
provide that payment of the tax is not a prerequisite to obtaining an 
extension of time to file, and that an extension of time to file does 
not operate to extend the time for payment of the tax. In response to 
this suggestion, the final regulations provide that, if an extension of 
time to file has been obtained but no extension of time to pay has been 
granted, interest will be due on the tax not paid by the due date and 
the estate will be subject to all applicable late payment penalties.
    One commentator suggested that, in addition to the automatic 6-
month extension of time to file, the regulations provide an automatic 
extension of time to pay. The commentator suggested that the executor 
be required to pay an amount equal to the executor's ``best estimate'' 
of the ultimate tax due and receive an automatic extension of time to 
pay any excess. The Treasury Department and the IRS believe that a 
standard incorporating an executor's ``best estimate'' would be 
difficult to administer, and the suggestion has not been adopted.
    One commentator suggested that the regulations provide the criteria 
to be used in approving or denying requests for extensions of time to 
file that do not qualify for the automatic 6-month extension. This 
suggestion has not been adopted. The Treasury Department and the IRS 
believe that the circumstances surrounding requests for extensions of 
time to file that do not qualify for the automatic 6-month extension 
generally present factual issues and questions warranting the broad 
discretion of the IRS office responsible for granting or denying the 
extension of time.

Special Analysis

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required. It also has been 
determined that section 553(b) of the Administrative Procedure Act (5 
U.S.C. chapter 5) does not apply and because this rule does not impose 
a collection of information on small entities, the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) does not apply to these 
regulations, and therefore, a Regulatory Flexibility Analysis is not 
required. Pursuant to section 7805(f) of the Internal Revenue Code, the 
notice of proposed rulemaking preceding these regulations was submitted 
to the Small Business Administration for comment on their impact on 
small business.

Drafting Information

    The principal author of these regulations is Mary Berman, Office of 
the Associate Chief Counsel (Passthroughs and Special Industries), IRS. 
However, other personnel from the IRS and Treasury Department 
participated in their development.

List of Subjects

26 CFR Part 20

    Estate taxes, Reporting and recordkeeping requirements.

[[Page 38546]]

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 20 and 602 are amended as follows:

PART 20--ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954

    Paragraph 1. The authority citation for part 20 is amended by 
adding an entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 20.6081-1 also issued under 26 U.S.C. 6081(a). * * *
    Par. 2. Section 20.6075-1 is revised to read as follows:


Sec. 20.6075-1  Returns; time for filing estate tax return.

    The estate tax return required by section 6018 must be filed on or 
before the due date. The due date is the date on or before which the 
return is required to be filed in accordance with the provisions of 
section 6075(a) or the last day of the period covered by an extension 
of time as provided in Sec. 20.6081-1. The due date, for a decedent 
dying after December 31, 1970, is, unless an extension of time for 
filing has been obtained, the day of the ninth calendar month after the 
decedent's death numerically corresponding to the day of the calendar 
month on which death occurred. However, if there is no numerically 
corresponding day in the ninth month, the last day of the ninth month 
is the due date. For example, if the decedent dies on July 31, 2000, 
the estate tax return and tax payment must be made on or before April 
30, 2001. When the due date falls on Saturday, Sunday, or a legal 
holiday, the due date for filing the return is the next succeeding day 
that is not Saturday, Sunday, or a legal holiday. For the definition of 
a legal holiday, see section 7503 and Sec. 301.7503-1 of this chapter. 
As to additions to the tax in the case of failure to file the return or 
pay the tax within the prescribed time, see section 6651 and 
Sec. 301.6651-1 of this chapter. For rules with respect to the right to 
elect to have the property valued as of a date or dates subsequent to 
the decedent's death, see section 2032 and Sec. 20.2032-1, and section 
7502 and Sec. 301.7502-1 of this chapter. This section applies to 
estates of decedents dying after August 16, 1954.

    Par. 3. Section 20.6081-1 is revised to read as follows:


Sec. 20.6081-1  Extension of time for filing the return.

    (a) Procedures for requesting an extension of time for filing the 
return. A request for an extension of time to file the return required 
by section 6018 must be made by filing Form 4768, ``Application for 
Extension of Time To File a Return and/or Pay U.S. Estate (and 
Generation-Skipping Transfer) Taxes.'' Form 4768 must be filed with the 
Internal Revenue Service office designated in the application's 
instructions (except as provided in Sec. 301.6091-1(b) of this chapter 
for hand-carried documents). Form 4768 must include an estimate of the 
amounts of estate and generation-skipping transfer tax liabilities with 
respect to the estate.
    (b) Automatic extension. An estate will be allowed an automatic 6-
month extension of time beyond the date prescribed in section 6075(a) 
to file Form 706, ``United States Estate (and Generation-Skipping 
Transfer) Tax Return,'' if Form 4768 is filed on or before the due date 
for filing Form 706 and in accordance with the procedures under 
paragraph (a) of this section.
    (c) Extension for good cause shown. In its discretion, the Internal 
Revenue Service may, upon the showing of good and sufficient cause, 
grant an extension of time to file the return required by section 6018 
in certain situations. Such an extension may be granted to an estate 
that did not request an automatic extension of time to file Form 706 
prior to the due date under paragraph (b) of this section, to an estate 
or person that is required to file forms other than Form 706, or to an 
executor who is abroad and is requesting an additional extension of 
time to file Form 706 beyond the 6-month automatic extension. Unless 
the executor is abroad, the extension of time may not be for more than 
6 months beyond the filing date prescribed in section 6075(a). To 
obtain such an extension, Form 4768 must be filed in accordance with 
the procedures under paragraph (a) of this section and must contain a 
detailed explanation of why it is impossible or impractical to file a 
reasonably complete return by the due date. Form 4768 should be filed 
sufficiently early to permit the Internal Revenue Service time to 
consider the matter and reply before what otherwise would be the due 
date of the return. Failure to file Form 4768 before that due date may 
indicate negligence and constitute sufficient cause for denial of the 
extension. If an estate did not request an automatic extension of time 
to file Form 706 under paragraph (b) of this section, Form 4768 must 
also contain an explanation showing good cause for not requesting the 
automatic extension.
    (d) Filing the return. A return as complete as possible must be 
filed before the expiration of the extension period. The return thus 
filed will be the return required by section 6018(a), and any tax shown 
on the return will be the amount determined by the executor as the tax 
referred to in section 6161(a)(2), or the amount shown as the tax by 
the taxpayer upon the taxpayer's return referred to in section 
6211(a)(1)(A). The return cannot be amended after the expiration of the 
extension period although supplemental information may subsequently be 
filed that may result in a finally determined tax different from the 
amount shown as the tax on the return.
    (e) Payment of the tax. An extension of time for filing a return 
does not operate to extend the time for payment of the tax. See 
Sec. 20.6151-1 for the time for payment of the tax, and Secs. 20.6161-1 
and 20.6163-1 for extensions of time for payment of the tax. If an 
extension of time to file a return is obtained, but no extension of 
time for payment of the tax is granted, interest will be due on the tax 
not paid by the due date and the estate will be subject to all 
applicable late payment penalties.
    (f) Effective date. This section applies to estates of decedents 
dying after August 16, 1954, except for paragraph (b) of this section 
which applies to estate tax returns due after July 25, 2001.

PART 602--OMB CONTROL UNDER THE PAPERWORK REDUCTION ACT

    Par. 4. The authority citation for part 602 continues to read as 
follows:

    Authority: 26 U.S.C. 7805.


    Par. 5. In Sec. 602.101, paragraph (b) is amended by revising the 
entry for Sec. 20.6081-1 to read as follows:


Sec. 602.101  OMB Control numbers.

* * * * *
    (b) * * *

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                                                             Current OMB
    CFR part or section where identified and described       control No.
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                 *        *         *        *        *
20.6081-1.................................................     1545-0015
                                                               1545-0181
                                                               1545-1707
 
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[[Page 38547]]

    Dated: Approved: July 17, 2001.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
Mark Weinberger,
Assistant Secretary of the Treasury.
[FR Doc. 01-18417 Filed 7-24-01; 8:45 am]
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