Protective Claim

Tax Professionals' Resource
August 31, 2012 — 1,099 views  
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For estate planners looking to file estate tax protective claims, there is a host of considerations to keep in mind. Planners and accountants filing claims looking for estate tax refunds should be mindful of the various procedures and regulations for who is eligible to file such a claim, the methods of filing and how and when to notify the Internal Revenue Service (IRS) that the claim is ready for consideration.

The first consideration is simply determining if the client in question is eligible to file an estate tax protective claim. According to the American Institute of CPAs, the claim can be filed by an estate fiduciary or any other person that is authorized to act on behalf of an estate. The third-party person must document his or her status and authorization by including certified copies of testimonial letters, letters of administration and other specific evidence.

Section 2053 of the IRS's guidance on estate tax protective claim procedures identifies the various eligible deductions from the value of decedents' gross estates, based on the specific types of expenses. These generally include funeral expenses, administration costs, unpaid mortgages and other claims against an estate. Regulations under this section mandate that a protective claim must identify the claim or expense and why its payment has been delayed. Once payment is made, the IRS can then process the claim and issue a refund as needed.

For estates of decedents that passed on or between October 20, 2009, and December 31, 2011, fiduciaries and estate planners filing claims can use Form 843, Claim for Refund and Request for Abatement. Meanwhile, for estates of decedents dying on or after January 1, 2012, estate planners can file using Form 843, while attaching Form 706 to it.

Once the aforementioned forms have been filed with the IRS, the fiduciary or appointed authorized person must notify the IRS that that claim for refund is now ready within 90 days after the claim or expense has been paid. Additionally, if the amount becomes certain and is no longer subject to any contingency at a later date than the 90 days, the IRS can be informed then.

Filing a protective claim to receive an estate tax refund can be simple and straightforward when following the above IRS guidelines.

Tax Professionals' Resource