AICPA Recommends Estate Tax Portability Relief for Surviving Spouses

March 26, 2015

IRS estate tax returnThe American Institute of CPAs (AICPA) submitted a letter on March 19 to the Internal Revenue Service (IRS) and the Department of the Treasury recommending relief for surviving spouses who would like to elect portability of their deceased spouse’s unused estate tax exemption. 

The portability election must be made by a decedent’s executor on a timely filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return.  However, executors of estates for decedents who died on January 1, 2014 or later may be unaware that a Form 706 is required to be filed (even for estates below the filing threshold) within nine months of the date of death in order for the surviving spouse to make the portability election.  

The AICPA requested that Treasury and IRS:

  • Permanently allow estates below the filing threshold 15 months after the death to file Form 706 in order to elect portability;
  • Provide a short Form 706-EZ to make the portability election; and
  • Allow the surviving spouse to file Form 706 for portability, if the executor chooses not to file the form because the estate is not otherwise required to do so.

These recommendations follow the suggestions the AICPA made in its September 2012 comment letter on the proposed (REG-141832-11) and temporary (TD 9593) regulations issued by the IRS and Treasury in June 2012 regarding guidance on the portability of the deceased spousal unused exclusion amount.  When Revenue Procedure 2014-18 was released in January 2014 it provided relief requested by the AICPA including:

  • IRS providing needed relief to estates below the filing threshold that were not aware of the filing requirement in order to make the portability election;
  • IRS providing additional relief and guidance for decedents who were in a same-sex marriage and did not file an estate tax return to claim portability; and
  • IRS issuing closing letters to estates electing portability.