ACTEC Submits Recommendations to IRS for 2021-2022 Priority Guidance Plan

FOR IMMEDIATE RELEASE

Washington, DC, May 27, 2020 — The American College of Trust and Estate Counsel (ACTEC) today announced the submission of recommendations pursuant to Notice 2021-28, 2021-18 I.R.B. 1130, published April 14, 2021, which invites recommendations for items that should be included on the 2021-2022 Priority Guidance Plan. ACTEC recommended two distinct proposals in their submission to the Internal Revenue Service.

The first item in the filing proposes an amendment to Treasury Regulation Section 25.6081-1 to allow an extension of time for filing a gift tax return to be based on a showing of “good cause” in the same manner as now provided in Treasury Regulation Section 20.6081-1 (c) for extensions to file estate tax returns. Currently, the only extension permitted for gift tax returns is the automatic 6-month extension of time required to be requested before the statutory deadline for filing the return. ACTEC submits that adding such a good cause exception to the gift tax regulation promotes the fair and equitable administration of the tax system.

“The expansion of the “good cause” exception to gift tax returns would well serve the fair and equitable administration of the tax system,” said Beth Shapiro Kaufman, Chair of ACTEC’s Tax Policy Study Committee. “This administrative grace period would provide a substantial benefit to taxpayers and return preparers, but would not hinder the government’s interests, as the taxpayer would still be required to provide “good and sufficient” cause for the extension.”

The second item in the filing proposes that guidance be issued to address a concerning complication under the estate tax when assets transferred during life are later included in the donor’s gross estate at death under section 2036; and when the lifetime transfer was made in exchange for consideration, and the consideration that was received appears to also be included in the gross estate, raising the issue of double taxation. Using examples of cases such as Estate of Powell v. Commissioner and other transactions, the proposal illustrates the United States Tax Court’s use of Section 2043 to avoid double estate taxation. ACTEC recommends that rather than utilizing Section 2043 as a tool to avoid double taxation, the better result would be to include only the assets transferred by the decedent in the pre-death transaction (to the partnership) where the taxpayer had retained such a power or interest in the partnership as to cause Section 2036 to apply. The proposal recommends that the Treasury Department and the Internal Revenue Service issue guidance, possibly in the form of a revenue ruling, adopting the position taken in the concurring opinion in Estate of Powell.

Acknowledging the various contributors who participated in developing the two sets of comments submitted, the College thanks Beth Shapiro Kaufman, Chair of the Tax Policy Study Committee; Richard S. Franklin, as primary drafter of the first proposal; Jonathan G. Blattmachr and Elizabeth T. Pierson, as primary drafters of the second proposal; Don D. Kozusko, Chair of the Washington Affairs Committee; and Vice Chair, William I. Sanderson.

About the American College of Trust and Estate Counsel (ACTEC): Established in 1949, The American College of Trust and Estate Counsel (ACTEC) is a national, nonprofit association of approximately 2,400 lawyers and law professors from throughout the United States and abroad. ACTEC members (Fellows) are peer-elected on the basis of professional reputation and expertise in the preparation of wills and trusts, estate planning, probate, trust administration and related practice areas. The College’s mission includes the improvement and reform of probate, trust and tax laws and procedures and professional practice standards. ACTEC frequently offers technical comments with regard to legislation and regulations but does not take positions on matters of policy or political objectives.

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