Better Late Than Never - A New Wrinkle to Portability!

It seems that on a daily basis, news breaks regarding the concept of portability.  Today’s news is that the IRS has announced that consideration will be given to taxpayers filing for 9100 relief in order to make a portability election of Federal Estate Tax Returns falling under the tax filing threshold.

What does this mean?

First, 9100 relief refers to Treasury Regulations, Subchapter F, Sec. 301.9100-3 which allows individuals and/or estates to apply for relief for failure to make timely elections in a tax filing.  This often applies in instances where the taxpayer is misinformed or uninformed by an election they may make and seeks the IRS’ permission to make such election late.  So if we apply this to the Federal Estate Tax Return (Form 706), in the strict sense of portability, the IRS is providing uninformed or misinformed taxpayers (i.e. the estates and surviving spouses), another bite at the apple.  The caveat being that this relief appears only to be considered for those estates that fall under the Federal Estate Tax filing threshold of $5.25 million.  Therefore, the IRS seems keen on allowing only those who would not need to file the Form 706 but for the portability election, to reconsider doing such.

Often times, we will send our clients letters or meet with them to advise them that despite falling under the Federal Estate Tax filing threshold, they may file a Federal Estate Tax return to elect portability.  However, for those individuals who may not have received such guidance, the IRS is extending the olive branch to allow those with estates under $5.25 million to reconsider filing for portability.  If you are one of these individuals, it might be wise to contact your estate planning attorney and conduct a cost/benefit analysis to determine if filing for portability is the right decision for you.  My recommendation:  Take advantage of this opportunity, you never know when the IRS will change their mind next!

-  Adam Abramowitz, Esq.

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