Extension of Time to Pay Federal Estate Tax

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Yes. The IRS may grant an extension to pay for a period of one year past the due date when reasonable cause exists. A 10-year extension to pay is discretionary. You apply for an extension to pay by filing Form 4768, Part III, and attaching it to your estate tax return Form 706. The extension of time to pay is only for the amount of the cash shortage. The reason for extension must be attached.

Examples of reasonable cause for not paying the estate tax on time include:

(1) the estate’s liquid assets are located in several jurisdictions and not immediately subject to the executor’s control;

(2) a substantial portion of the estate’s assets consist of rights to receive payments in the future (e.g., annuities, copyright royalties, accounts receivable);

(3) an estate includes a claim to substantial assets that cannot be collected without a lawsuit; and

(4) the estate would be forced to borrow at a higher interest rate than generally available to (1) pay the taxes, (2) provide a reasonable allowance during the administration period for the decedent’s surviving spouse and dependent children, and (3) satisfy the claims against the estate that are due.

If an extension is granted, interest is charged from the regular due date to the date of payment.

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