What is the law regarding a tax closing letter?

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What is the law regarding a tax closing letter?

My stepgrandfather passed away 6 months ago. I was named in the Will for a bequest. The estate probate was filed and according to the executor the estate was filed with the IRS 3 months ago. We were told that bequests would not be distributed until the IRS had provided the “Tax Closing Letter”. They expected the process to take about a year. They also mentioned that the IRS had 3-5 years to finish this process. I am looking for some concrete information regarding the process, specifically the tax closing letter and trying to determine if there is any advantage to legal representation.

Asked on February 21, 2012 under Estate Planning, Massachusetts

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Under federal law, in order to obtain a release of any inheritance tax lien, a form 706 must be filed by the executor with the Internal Revenue Service and a tax clearance letter received by this entity for the estate's assets to be distributed in full and the estate closed.

In most situations, an amount of the state of 1.5 times the amount of the estimated inheritance tax is held back by thr executor or the trustee of the estate. My experience is that one usually gets a tax clearance in a couple of months after form 706 is filed.

I suggest that you consult with a tax attorney concerning any further questions that you might have as to your question. Otherwise, I suggest that you simply consult with the estate's attorney on the subject.


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