This morning, August 21, 2015, the IRS issued Notice 2015-57, extending until February 29, 2016, the due date for any basis report required by new Section 6035 of the Internal Revenue Code that is due before February 29, 2016. In an earlier blog we discussed the new obligations imposed upon executors under the Highway Bill signed into law on July 31, 2015. Included among those new obligations was a requirement under section 6035 for executors of an estate that was required to file a federal estate tax return to furnish a statement to the beneficiaries of the estate and the IRS reporting the basis of property the beneficiaries receive within 30 days after filing the estate tax return. Since the law was effective as of July 31, 2015, the executors of any estate tax return filed after that date faced the prospect of furnishing such a statement, possibly as early as August 31, 2015.
As we pointed out in our blog, the new law raised significant questions about how executors were to comply with its provisions, not the least of which is that the executors of estates that are large enough to be required to file an estate tax return rarely know exactly what property beneficiaries will receive until much later than 30 days after the return is filed. Section 6035 does authorize the Secretary of the Treasury to issue rules and regulations that may be necessary to carry out its provisions, but of course, no regulations could possibly have been issued before those executors unlucky enough to be filing a return close in time to the effective date of the new law were due to file a basis report purporting to set out that very information.
Fortunately, IRS recognized the difficulties faced by those executors who were being put in a position of trying to comply with the law without any guidance about how they should do that. Notice 2015-57 states that the IRS expects to issue guidance to assist executors complying with sections 1014(f) and 6035. It advises that no statements should be filed under section 6035 until there is a form or further guidance issued by the IRS, and extends the due date for any statement that would be due before February 29, 2016 until that date. The Notice invites comments and no doubt they will get an earful. However, we should give a nod to IRS that it saw the problem and used its authority to give executors in a tight spot a temporary reprieve.