Tax News

CCH (cch.taxgroup.com) reports:

The IRS has changed its policy and provided interim guidance for estates making a Code Sec. 6166 election to pay all or part of the estate tax in installments. In order to protect the government's interest in the deferred estate tax, the IRS had required that, when making a Code Sec. 6166 election, an estate must post a surety bond or grant the IRS a Code Sec. 6324A special extended lien. However, the Tax Court in E. Roski, Sr. Est. , 128 TC 113 Dec. 56,896, determined that the IRS had abused its discretion by requiring that every estate provide a bond or special tax lien to qualify for the Code Sec. 6166 election. The court found that it was Congress's intent that the IRS would evaluate on a case-by-case basis whether the bond or special tax lien requirements were necessary.
Until the IRS and the Treasury Department establish criteria to identify the estates that are at risk of not making the deferred payments, the IRS will consider the following non-exclusive factors: (1) the duration and stability of the closely held business on which the estate tax is differed; (2) the estate's ability to pay installments of tax and interest timely; and (3) the estate's compliance history. The notice applies to each estate: (1) that timely elects to pay the estate tax in installments and timely files a return on or after November 13, 2007; (2) whose return was being classified, surveyed or audited by the IRS as of April 12, 2007; or (3) that is currently in the deferral period but has not yet provided a bond or special lien if the general estate tax lien will expire within two years from November 13, 2007 or there is a reasonable belief that the collection of the tax and interest is sufficiently at risk to require a bond or special lien.
The Treasury Department and the IRS plan to issue regulations concerning the appropriate standards to be applied by the IRS and invite comments regarding such standards. Specifically, comments are requested concerning the following: (1) what additional factors the IRS should use in determining whether an estate should be required to provide a bond or special lien; (2) how frequently should the IRS reevaluate whether the estate poses a significant credit risk to the government's collection; (3) which facts are likely to be accurate predictors of future default of the differed tax payments and related interest; (4) what additional financial information the IRS should request from the estate in order to make its determination; and (5) whether the IRS should define surety bond to include other forms of security and what forms should be added.
Written and electronic comments are encouraged to be submitted by January 14, 2008. Written comments should be sent to IRS CC PA LPD PR (Notice 2007-90), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20224. They may also be hand-delivered to the IRS Courier's Desk. Electronic comments can be submitted to notice.comments@irscounsel.treas.gov (indicate Notice 2007-90).
Notice 2007-90, FINH ¶30,565
Other References:
Code Sec. 6165
CCH Reference - FINH ¶20,642.20
Code Sec. 6166
CCH Reference - FINH ¶20,665.70
Code Sec. 6324A
CCH Reference - FINH ¶21,085.40
Tax Research Consultant
CCH Reference - TRC ESTGIFT: 51,166
CCH Reference - TRC ESTGIFT: 51,210