IRS extends estate tax deadlines
The Internal Revenue Service is allowing large estates of people who died in 2010 until early next year to file various required returns and pay any estate taxes due, also offering penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns.
The allowance is intended to give large estates, normally those with more than $5 million and including the value of businesses being bequeathed, more time to comply with key tax law changes enacted late last year. Late-payment and negligence penalty relief applies to people who inherited property from a benefactor who died in 2010, and who then sold the property last year but improperly reported a gain or loss because they did not know whether the estate made the carryover basis election.
Large estates opting out of the estate tax now will have until Jan. 17 next year to file a special carryover basis form, which was previously due on Nov. 15 this year.
Estates that request an extension will have until March 2012 to file their returns and pay any tax due. Normally, a six-month filing extension is automatically granted to estates filing this form, but extensions are granted only for good cause.
For estates of those dying between Dec. 17 and Dec. 31 last year, the due date is 15 months after the date of death. No late-filing or late-payment penalties will be due, though interest still will be charged on any estate tax paid after the original due date.
Special penalty relief was available to many individuals, estates and trusts that already filed a 2010 federal income tax return or obtained an extension and planned to file by the Oct. 17 extended due date.
IRS tallies 30,000 offshore disclosures
Since 2009 when the IRS demanded disclosure of funds held in hidden offshore accounts, 30,000 people have stepped forward with information on their accounts, including 12,000 this year.
The programs gave U.S. taxpayers with undisclosed assets or income offshore a second chance to pay back taxes and avoid potential criminal charges. The IRS has collected more than $2.2 billion from people who volunteered information in the 2009 program, reflecting closures of about 80 percent of the cases from the initial offshore program. On top of that, the IRS has collected an additional $500 million in taxes and interest as “down payments” for the 2011 year that ended in September ”“ a figure that will increase because it doesn”™t yet include penalties.
UBS AG, Switzerland”™s largest bank and a major employer in Stamford, agreed in 2009 to pay $780 million in fines, penalties, interest and restitution as part of a deferred prosecution agreement with the U.S. government.
“We have pierced international bank secrecy laws and we are making a serious dent in offshore tax evasion,” said IRS Commissioner Doug Shulman, in a prepared statement. “We have changed the risk calculus. Americans now understand that if they try to hide assets overseas, the chances of being caught continue to increase.”