[Federal Register Volume 65, Number 204 (Friday, October 20, 2000)]
[Proposed Rules]
[Pages 63025-63027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26942]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 20

[REG-106511-00]
RIN 1545-AX98


Estate Tax Returns; Form 706, Extension to File

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

-----------------------------------------------------------------------

SUMMARY: This document contains proposed regulations relating to the 
filing of an application for an automatic 6-month extension of time to 
file an estate tax return (Form 706). The proposed regulations provide 
guidance to executors of decedents' estates on how to properly file the 
application for the automatic extension. This document also provides 
notice of a public hearing on these proposed regulations.

DATES: Written and electronic comments must be received by January 18, 
2001. Outlines of topics to be discussed at the public hearing 
scheduled for January 24, 2001, at 10 a.m., must be received by January 
3, 2001.

ADDRESSES: Send submissions to: CC:M&SP:RU (REG-106511-00), room 5226, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. Submissions may also be hand delivered Monday through Friday 
between the hours of 8 a.m. and 5 p.m. to: CC:M&SP:RU (REG-106511-00), 
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, 
NW., Washington, DC. Alternatively, taxpayers may submit comments 
electronically via the internet by selecting the ``Tax Regs'' option on 
the IRS Home Page, or by submitting comments directly to the IRS 
internet site at http://www.irs.gov/tax__regs/reglist.html. The public 
hearing will be held in Room 4716, Internal Revenue Service Building, 
1111 Constitution Avenue, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, 
Mary A. Berman, (202) 622-3090; concerning submissions of comments, the 
hearing, and/or to be placed on the building access list to attend the 
hearing, LaNita Van Dyke, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    The collection of information contained in this notice of proposed 
rulemaking has been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)). Comments on the collection of information should be 
sent to the Office of Management and Budget, Attn: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503, with copies to the Internal Revenue 
Service, Attn: IRS Reports Clearance Officer, OP:FS:FP, Washington, DC 
20224. Comments on the collection of information should be received by 
December 19, 2000. Comments are specifically requested concerning:
    Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Internal Revenue Service, 
including whether the information will have practical utility;
    The accuracy of the estimated burden associated with the proposed 
collection of information (see below);
    How the quality, utility, and clarity of the information to be 
collected may be enhanced;
    How the burden of complying with the proposed collection of 
information may be minimized, including through the application of 
automated collection techniques or other forms of information 
technology; and
    Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of service to provide information.
    The collection of information in this proposed regulation is in 
Sec. 20.6081-1(b). To receive an extension of time to file an estate 
tax return, the executor of a decedent's estate must file Form 4768, 
``Application for Extension of Time To File a Return and/or Pay U.S. 
Estate (and Generation-Skipping Transfer) Taxes.'' This information is 
required to obtain a benefit (an automatic 6-month extension of time to 
file an estate tax return). The collection of information is mandatory 
if the extension is requested.

[[Page 63026]]

The likely respondents are executors of decedents' estates.
    The reporting burden contained in Sec. 20.6081-1(b) is reflected in 
the burden of Form 4768, ``Application for Extension of Time To File a 
Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) 
Taxes.''
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by the Office of Management and Budget.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
tax information are confidential, as required by 26 U.S.C. 6103.

Background

    In 1970, Congress amended section 6075(a) to provide that the 
Federal estate tax return is to be filed within 9 months after the date 
of the decedent's death. Section 6081(a) provides that the Secretary 
may grant a reasonable extension of time for filing any return; 
however, except in the case of taxpayers who are abroad, no such 
extension may be for more than 6 months.
    Under the current regulations, the district director or the service 
center has the discretion to grant an extension of time to file an 
estate tax return upon a showing of ``good and sufficient cause.'' 
Except in the case of executors who are abroad, the extension may not 
be granted for more than 6 months. Requests for an extension of time to 
file are made by completing Form 4768, ``Application for Extension of 
Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping 
Transfer) Taxes.'' Upon receipt of a Form 4768, the IRS reviews the 
application, makes a determination, and notifies the applicant as to 
whether an extension is approved and, if so, the length of the 
extension.
    In 1998, 110,100 estate tax returns were filed. In a significant 
number of these cases, the executors requested an extension of time to 
file. A majority of the applications requested and received the maximum 
6-month extension allowed by the statute and the regulations. The IRS 
and the Treasury Department believe that executors of decedents' 
estates would benefit from the certainty created by an automatic 6-
month extension of time to file Form 706 and that it is appropriate to 
provide for the extension.

Explanation of Provisions

    Under the proposed regulations the executor of a decedent's estate 
will be allowed an automatic 6-month extension of time to file Form 
706, ``United States Estate (and Generation-Skipping Transfer) Tax 
Return,'' beyond the 9 months provided for by section 6075(a). The 
application for the automatic extension must be submitted on Form 4768 
(or in any other manner as may be prescribed by the Commissioner). The 
application must be filed with the IRS on or before the date prescribed 
by section 6075(a) for filing the Form 706 and it must include an 
estimate of the full amount of tax due. The automatic extension of time 
does not apply to filers of Forms 706-A, 706-D or 706-NA who will 
continue to use Form 4768 to request extensions of time to file and pay 
estate taxes. The automatic extension of time also does not apply to 
filers of Form 706-QDT who will continue to request any extension of 
time as provided in the instructions for Form 706-QDT. The proposed 
regulations continue to permit executors who are abroad to request 
extensions beyond the automatic 6-month period.
    A return as complete as possible must be filed before the 
expiration of the automatic 6-month extension period. The return as 
filed will be the return required by section 6018(a)(1). An extension 
of time for filing the return does not operate to extend the time for 
payment of the tax.
    The proposed regulations also revise Sec. 20.6075-1 to conform to 
the changes proposed in Sec. 20.6081-1.

Special Analysis

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations, and because 
these regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Therefore, a Regulatory Flexibility Analysis is not required. 
Pursuant to section 7805(f) of the Internal Revenue Code, the 
regulations will be submitted to the Small Business Administration for 
comment on their impact on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (a signed original and eight 
(8) copies) or electronic comments that are submitted timely (in the 
manner described in ADDRESSES) to the IRS. Treasury and the IRS 
specifically request comments on the clarity of the proposed 
regulations and how they can be made easier to understand. All comments 
will be available for public inspection and copying.
    A public hearing has been scheduled for January 24, 2001, at 10 
a.m. in Room 4716, Internal Revenue Building, 1111 Constitution Avenue, 
NW., Washington, DC. Due to building security procedures, visitors must 
enter at the 10th Street entrance, located between Constitution and 
Pennsylvania Avenues, NW. In addition, all visitors must present photo 
identification to enter the building. Because of access restrictions, 
visitors will not be admitted beyond the immediate entrance area more 
than 15 minutes before the hearing starts. For information about having 
your name placed on the building access list to attend the hearing, see 
the FOR FURTHER INFORMATION CONTACT section of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons 
that wish to present oral comments at the hearing must submit comments 
by January 3, 2001, and submit an outline of the topics to be discussed 
and the time to be devoted to each topic (signed original and eight (8) 
copies) by January 3, 2001. A period of 10 minutes will be allotted to 
each person for making comments. An agenda showing the scheduling of 
the speakers will be prepared after the deadline for receiving outlines 
has passed. Copies of the agenda will be available free of charge at 
the hearing.

Drafting Information

    The principal author of these proposed regulations is Mary A. 
Berman, Office of the Associate Chief Counsel (Passthroughs and Special 
Industries), IRS. However, other personnel from the IRS and Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 20

    Estate taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 20 is proposed to be amended as follows:

[[Page 63027]]

PART 20--ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 
1954

    Paragraph 1. The authority citation for part 20 is amended by 
adding an entry in numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Section 20.6081-1 also issued under 26 U.S.C. 6081(a). * * *
    Par. 2. Section 20.6075-1 is revised to read as follows:


Sec. 20.6075-1  Returns; time for filing estate tax return.

    The estate tax return required by section 6018 must be filed on or 
before the due date. The due date is the date on or before which the 
return is required to be filed in accordance with the provisions of 
section 6075(a) or the last day of the period covered by an extension 
of time as provided in Sec. 20.6081-1. The due date, for a decedent 
dying after December 31, 1970, is, unless an extension of time for 
filing has been obtained, the day of the ninth calendar month after the 
decedent's death numerically corresponding to the day of the calendar 
month on which death occurred, except that, if there is no numerically 
corresponding day in such ninth month, the last day of the ninth month 
is the due date. For example, if the decedent dies on July 31, 2000, 
the estate tax return and tax payment must be made on or before April 
30, 2001. When the due date falls on Saturday, Sunday, or a legal 
holiday, the due date for filing the return is the next succeeding day 
that is not Saturday, Sunday, or a legal holiday. For the definition of 
a legal holiday, see section 7503 and Sec. 301.7503-1 of this chapter. 
As to additions to the tax in the case of failure to file the return or 
pay the tax within the prescribed time, see section 6651 and 
Sec. 301.6651-1 of this chapter. For rules with respect to the right to 
elect to have the property valued as of a date or dates subsequent to 
the decedent's death, see section 2032 and Sec. 20.2032-1, and section 
7502 and Sec. 301.7502-1 of this chapter. This section applies to 
estates of decedents dying after August 16, 1954.
    Par. 3. Section 20.6081-1 is revised to read as follows:


Sec. 20.6081-1  Extension of time for filing the return.

    (a) Extensions of time for good cause shown. Where it is impossible 
or impracticable to file a reasonably complete return within the time 
prescribed by statute, the person required to file the return may 
request an extension of time for filing. Except as provided in 
paragraph (b) of this section, an extension of time for filing an 
estate tax return is not automatic and is within the discretion of the 
Internal Revenue Service. Unless the person required to file the return 
is abroad, an extension may not be granted for more than 6 months from 
the filing date prescribed by statute. Requests for an extension of 
time for filing are made by submitting Form 4768, ``Application for 
Extension of Time To File a Return and/or Pay U.S. Estate (and 
Generation-Skipping Transfer) Taxes.'' The application must contain a 
full recital of the causes for the delay. It should be filed with the 
Internal Revenue Service office designated in the application's 
instructions (except as provided in Sec. 301.6091-1(b) of this chapter 
for hand-carried documents). The application should, where possible, be 
filed sufficiently early to permit the Internal Revenue Service time to 
consider the matter and reply before what otherwise would be the due 
date of the return. Failure to file the application before the 
expiration of the time within which the return otherwise must be filed 
may indicate negligence and constitute sufficient cause for denial of 
the extension.
    (b) Automatic extension--(1) Application for extension. Executors 
who are required to file Form 706, ``United States Estate (and 
Generation-Skipping Transfer) Tax Return,'' may request an automatic 6-
month extension of time beyond the date prescribed in section 6075(a) 
for filing the return by submitting Form 4768, ``Application for 
Extension of Time To File a Return and/or Pay U. S. Estate (and 
Generation-Skipping Transfer) Taxes.'' An automatic extension will be 
allowed if--
    (i) The application is filed on or before the date prescribed in 
section 6075(a) for filing the return;
    (ii) The application is filed with the Internal Revenue Service 
office designated in the application's instructions (except as provided 
in Sec. 301.6091-1(b) of this chapter for hand-carried documents); and
    (iii) The application includes an estimate of the amount of estate 
and generation-skipping transfer tax liability with respect to the 
estate.
    (2) Executors who are abroad. If an executor who is abroad has 
received an automatic 6-month extension, the executor may request an 
additional extension of time by following the procedures in paragraph 
(a) of this section.
    (c) Filing the return. A return as complete as possible must be 
filed before the expiration of the extension period. The return thus 
filed will be the return required by section 6018(a), and any tax shown 
on the return will be the amount determined by the executor as the tax 
referred to in section 6161(a)(2), or the amount shown as the tax by 
the taxpayer upon the taxpayer's return referred to in section 
6211(a)(1)(A). The return cannot be amended after the expiration of the 
extension period although supplemental information may subsequently be 
filed that may result in a finally determined tax different from the 
amount shown as the tax on the return.
    (d) Payment of the tax. An extension of time for filing a return 
does not operate to extend the time for payment of the tax. See 
Sec. 20.6151-1 for the time for payment of the tax, and Secs. 20.6161-1 
and 20.6163-1 for extensions of time for payment of the tax.
    (e) Effective date. This section applies to estates of decedents 
dying after August 16, 1954, except for paragraph (b) of this section 
which applies to estate tax returns due after the date these 
regulations are published as a final regulation in the Federal 
Register.

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 00-26942 Filed 10-19-00; 8:45 am]
BILLING CODE 4830-01-P