An estate is frozen the moment that a federal estate tax return is received by the IRS. This means that assets cannot be transferred, and other transactions cannot be initiated or completed until the return is accepted. When that happens, the IRS will send an estate tax closing letter indicating that the return has been fully processed and accepted. Georgia residents and others may need to wait several months or years after submitting a return to receive this letter.
It usually takes at least six weeks for the IRS to enter Form 706 into its database. If the return is accepted, it can take up to nine months to receive the estate tax closing letter. Alternatively, the IRS will send notice that an estate is being audited. If an audit occurs, it will typically take up to six months to complete, and in more complex cases, it may take years to complete the process.
Those who have questions about Form 706 are encouraged to contact the IRS estate and gift tax unit directly. It is also a good idea to review a notice carefully if a demand for payment has been made. If a payment was made when a return was filed, individuals should check to see if it has been credited to the estate’s account before taking any further action.
Individuals may be able to take steps prior to their deaths to minimize their federal estate tax bills. In some cases, it may be possible to eliminate them altogether. An attorney may be able to help a person create a revocable or irrevocable trust to shelter money outside of his or her estate. Legal counsel may also provide advice as it relates to making gifts prior to passing on as that could also minimize an estate’s value.