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Estate Tax Closing Letter

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Definition: The form letter issued by the IRS after a federal estate tax return, IRS Form 706, United States Estate and Generation-Skipping Transfer) Tax Return, has been reviewed and accepted by the IRS.

In states that collect a state estate tax or state inheritance tax, the state taxing authority will issue an estate tax or inheritance tax closing letter in order to indicate the state estate or inheritance tax return has been reviewed and accepted by the state taxing authority. This document may also be required to clear any automatic state estate tax or inheritance tax liens placed against property located in the applicable state.

According to the IRS's website, heirs can expect a closing letter to be issued within four to six months from the date that Form 706 is filed if the return is without errors or special circumstances. From personal experience with multiple estates, however, this is simply not accurate. Instead, count on either receiving the closing letter, or a letter informing the executor that the estate's Form 706 is being audited, within six to nine months from the date that Form 706 is filed.

In order to check on the status of IRS Form 706 after it has been filed, wait at least five months before calling the estate and gift tax unit at 866-699-4083.

In some states, such as Florida, an estate taxable at the federal level must file the IRS estate tax closing letter once it is received from the IRS with the appropriate probate court before the Florida estate can be officially closed.

Also Known As: Estate Closing Letter, Estate Tax Release

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