The IRS has once again extended (Notice 2016-17) the filing deadline for executors of estates and others required under new Section 6035 to file statements on the value of certain property. The new deadline is June 30, 2016, a change from the March 31 date that had been established in February under Notice 2016-19 (see Tax Alert 2016-337).

Background

The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, signed into law in mid-2015, added to the code: (1) Section 6035, generally requiring the executor of an estate that files its estate tax return after July 31, 2015, to provide a statement identifying the value of property reported on the return to both the IRS and the beneficiaries acquiring any interest in the property; and (2) Section 1014(f), providing that the basis of any property acquired from a decedent to which Section 1014(a) applies may not exceed the final estate tax value of the property or, if the final value has not yet been determined, the value reported on a statement furnished under new Section 6035.

Section 6662(b)(8) imposes an accuracy-related penalty on the portion of any underpayment of tax required to be shown on a return that is attributable to inconsistent estate basis. Section 6662(k) provides that an inconsistent estate basis arises if the basis of property claimed on a return exceeds its final value as determined under Section 1014(f). (See Tax Alert 2015-1532.)

In early March 2016, the IRS provided guidance on consistent basis reporting for estates and beneficiaries through temporary (TD 9757) and proposed regulations (REG-127923-15). (See Tax Alert 2016-469.)

Deadline delays

Since adding Sections 6035 and 1014 to the code, the IRS has delayed several times the due date for statements required under Section 6035 — Notice 2015-57 delayed the deadline to February 29, 2016 (see Tax Alert 2015-1650); Notice 2016-16 pushed the requirement off to March 31, 2016; and Notice 2016-27 has further extended the due date to June 30, 2016. The new notice explains that the additional extension is being provided in response to "numerous comments that executors and other persons have not had sufficient time to adopt the systemic changes that would enable the filing of an accurate and complete Form 8971 and Schedule A."

Implications

Taxpayers and tax professionals dealing with this new information reporting regime will appreciate the extension of time while they work through who must file the form, what information needs to be included on the form, and how the assets on Form 8971 interact with the basis consistency rules. The public should not, however, hold out for yet another extension of time from the IRS on Form 8971.

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