Fee Now Required for IRS Estate Tax Closing Letters

Beginning October 28, 2021, the IRS began to charge a user fee for issuing an estate tax closing letter. The new $67 fee was initiated to address budget and resource constraints as well as the high volume of estate tax return filings since 2010 when the applicable exemption portability provision was enacted.

An estate tax closing letter, formerly known as IRS Letter 627, acknowledges the IRS’s acceptance of the estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) and provides some return information, such as the amount of net estate tax and the amount of generation-skipping transfer tax.

The estate tax closing letter also explains that the IRS will not reopen or examine the estate tax return to re-determine the estate tax liability unless the estate notifies the IRS of changes to the estate tax return or if there is: (1) evidence of fraud, malfeasance, collusion, concealment, or misrepresentation of a material fact; (2) a clearly defined substantial error based upon an established IRS position; or (3) a serious administrative omission.

Executors typically want an estate tax closing letter before completing the administration of an estate in order to avoid personal liability for any estate tax or generation-skipping transfer tax due. Prior to June 2015, estate tax closing letters were automatically issued by the IRS upon the closing of every estate tax return filed. Since June 2015, estate tax closing letters have been issued only upon request.

Requesting a Closing Letter

A one-step process set forth at https://www.pay.gov/ must now be used to request an estate tax closing letter and pay the user fee. The following information must be provided when requesting a closing letter:

• The decedent’s name, Social Security number, date of death, and address (as listed on Form 706)
• The executor’s or trustee’s name and address (as listed on Form 706)

The closing letter will be mailed only to the executor or trustee and those individuals authorized by the Form 706 or a power of attorney.

Account Transcript

An account transcript, for which there is no user fee, may be an acceptable substitute for an estate tax closing letter. While the account transcript does not contain all of the information provided by an estate tax closing letter, it can be relied upon for confirmation that the IRS examination of the estate tax return as been closed (which is often the primary reason for requesting an estate tax closing letter).

For information about estate tax closing letters, contact us. We are here to help.

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