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Abstract
When a decedent's estate is being contested, the litigation often extends beyond the time that the decedent's federal estate tax return (the "706") is required to be filed and federal estate taxes are required to be paid. If, upon conclusion of the litigation, the amount of the Taxable Estate changes, the executor is often laced with the dilemma as to whether to file an amended or Supplemental 706. This article will discuss the law regarding the filing or nonfiling of a Supplemental 706, factors to consider with respect to filing or not filing, and the ramifications to the estate, the fiduciaries and the preparers of the decision to file or not file. The general rule regarding the filing of tax returns is that the statute of limitations for assessment is three years from the date that the return was filed. The preparer of the 706 should be aware of potential Circular 230 issues and that notwithstanding the legal conclusions.
Full text
There is no explicit requirement in the Code, Regs., case law, or IRS pronouncements that a Supplemental 706 must be filed where the value of an estate changes as a result of litigation. Nevertheless, a Supplemental 706 may be required to be filed.
When a decedent's estate is being contested, the litigation often extends beyond the time that the decedent's federal estate tax return (the "706") is required to be filed and federal estate taxes are required to be paid. If, upon conclusion of the litigation, the amount of the Taxable Estate1 changes, the executor is often faced with the dilemma as to whether to file an amended or Supplemental 706 (referred to herein as a "Supplemental 706"). This article will discuss the law regarding the filing or nonfiling of a Supplemental 706, factors to consider with respect to filing or not filing, and the ramifications to the estate, the fiduciaries and the preparers of the decision to file or not file.
Supplemental 706s and filing requirements (or the lack thereof)
The general rule regarding the filing of tax returns is that the statute of limitations for assessment is three years from the date that the return was filed (the "3-Year Period").2 Exceptions to the 3-Year Period will be discussed later.
The Code and Regulations are devoid of any provision that requires a taxpayer to file an amended tax return.3 While the Regulations indicate that, in certain circumstances, a taxpayer "should" file an amended "income" tax return,4 there is no similar suggestion regarding an amended estate tax return. Furthermore, the Regulations provide that an estate tax return "cannot be amended after the expiration of the extension period although supplemental information may subsequently be filed."5
Support for the position that a supplemental return is not required to be filed is contained in the U.S. Supreme Court's opinion in Badaracco.6 Badaracco resolved a longstanding judicial conflict as to whether a taxpayer who filed a fraudulent return can later, by filing a nonfraudulent amended return, terminate the indefinite statute of limitations period in Section 6501 (c)( 1 ) and commence the general 3-Year Period. The Supreme Court stated that "the Code does not explicitly provide for or require the filing of an amended return," which the Supreme Court also characterized as "a creature of administrative origin and grace."7
Practitioners involved in a probate litigation are often confronted with the question of whether this conclusion is altered if there is a change in the Taxable Estate as a result of the litigation which results in additional federal estate taxes payable.8 That is, does the executor have an obligation to somehow amend the estate tax return in order to pay the additional estate taxes?
In Estate of Williamson,9 the decedent died on 6/30/87, and, in September 1987, the executor made a demand from the surviving spouse for the identification and transfer of the decedent's one-half interest in the community assets. A dispute ensued between the executor and the surviving spouse concerning such assets and, as a result, an action was brought on 1/21/88 seeking to establish the estate's claim to the decedent's one-half of the community assets.
As a result of the pending dispute, the executor requested an extension of time to file the 706. The executor attached a statement to the request which said that the pending dispute prevented him from properly identifying, inventorying, or marshalling the estate's assets. The 706 was timely filed on extension on 9/30/88, and the executor attached to the 706 the extension request (with the attached statement describing the pending dispute).
On 9/11/90, the parties agreed to a settlement, pursuant to which the estate received assets collectively valued at $3.6 million. The additional assets represented a significant increase in the decedent's Gross Estate, which resulted in additional estate taxes payable.10 A final inventory for the property and valuation was received on 9/16/91, which was 15 days prior to the expiration of the 3- Year Period on 9/30/91." On 9/21/94, or almost three years after the 3-Year Period had expired, the IRS issued a deficiency notice.
Although the Tax Court's opinion focused on arguments concerning the extension of the statute of limitations, the opinion also contains an important implicit ruling concerning the filing of a Supplemental 706. The executor was aware of the final value of the estate on 9/16/91, which was 15 days prior to the end of the 3-Year Period, and, according to the opinion, "there is no evidence that any amended estate tax return was filed by the petitioner."12 Thus, based on these facts, the executor was aware of a valuation change prior to the close of the 3-Year Period, which resulted in additional estate taxes payable, and did not file a Supplemental 706.
The Tax Court held that because the 3-Year Period had run before the IRS brought its assessment, the assessment was denied. It was completely irrelevant that additional estate taxes were due.13 Consequently, the Williamson cases would appear to implicitly support the notion that there is no legal or otherwise mandatory requirement to file a Supplemental 706 even where new information that may affect the ultimate estate tax liability is discovered after the original 706 is filed.
The 3-Year Period and its exceptions
Section 650 1 (a ) states that, except as otherwise provided, the amount of tax due must be assessed within the 3 -Year Period regardless of whether the return is timely filed. The filing of a return can start the running of the 3-Year Period under Section 6501(a) even if the return is defective or incomplete in certain respects.14 In determining whether a return is filed for purposes of commencing the 3-Year Period, the Tax Court follows a four-part test:
1. There must be sufficient data to calculate tax liability;
2. The document must purport to be a return;
3. There must be an honest and reasonable attempt to satisfy the requirements of the law; and
4. The taxpayer must execute the return under penalties of perjury.16
As a general rule, additions to tax and assessable penalties found in Sections 665 1 -6657, 6662, 6663, and 6671-6723 must be assessed, collected, and paid in the same manner as taxes.16 The assessment of these amounts is also subject to the 3-Year Period under Section 650 1 (a) to the extent that they pertain to a particular tax return, and collection of these amounts is subject to the ten-year period under Section 6502." Civil tax penalties imposed under Sections 6651-6751 are due and payable upon notice and demand.18 Interest on a tax may be assessed and collected at any time within the period of limitations on collection after assessment of the tax to which it relates.19 Interest on underpayment of tax and on penalties is also payable upon notice and demand, and is assessed, collected and paid in the same manner as taxes.20
Section 6501(c) contains the exceptions to the 3-Year Rule. With respect to the filing of a Supplemental 706, two such exceptions are significant.
Under Section 6501(c)(1), in the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed at any time.21 This exception is primarily asserted where the assessment occurs after the statutorily prescribed limitations period. The burden of proof is on the IRS to affirmatively demonstrate that the deficiencies in years otherwise barred were due to fraud,22 and the burden must be carried by clear and convincing evidence.23
The essential element that must be proven is that the taxpayer intended to defraud the government on the return by calculated tax evasion - i.e., that the conduct had as its specific purpose the evasion of a tax known or believed to be owing.24 Furthermore, where the IRS seeks to impose fraud penalties with respect to alleged false and fraudulent returns, "the returns themselves are subjected to the test" and the critical inquiry centers on "the intent at or before the time the return is filed, not some later date/' Therefore, subsequent conduct of the taxpayer is not relevant in determining fraud unless the fraudulent intent is shown to have existed when the return was made.25
The second significant exception to the 3-Year Rule is found in Section 6501(e)(2), which provides that in the case of a 706, if the taxpayer omits items that are includable in the Gross Estate that collectively exceed 25% of the amount of the Gross Estate stated on the 706, the tax may be assessed at any time within six years after the 706 was filed (the "25% Test"). In determining the items omitted from the Gross Estate, there is not to be taken into account any item which is omitted from the Gross Estate if such item is disclosed on the 706, or in a statement attached to the 706, in a manner adequate to apprise the IRS of the nature and amount of such item.26 Thus, even if a taxpayer unintentionally omits an item from a 706, and if the inclusion of the item would result in an overall increase in the Gross Estate by more than 25% of the Gross Estate as reported on the 706, the 3- Year Period is extended by three additional years.
Solution to avoid Section 6501(c)- Adequate disclosure
Especially in circumstances involving probate litigation, the practitioner should include a statement with the 706 referencing and providing basic details of the litigation, including the nature of the case, the primary issues argued before the applicable court and sufficient other information to apprise the IRS of the nature of any omitted items which could change the estate tax liability so that a decision as to whether the 706 should be selected for audit may be a reasonably informed one (the "Statement").27 Through the voluntary disclosure of the litigation, neither fraud nor a substantial omission should be present even if the litigation results in a substantial increase in value to the Gross Estate.
As for the fraud exception, if the litigation is referenced on the 706, the critical element of fraud - intentional deceit - is eliminated. There is no deceit; the taxpayer is addressing the issue and stating that the result of the litigation may affect the value of the Gross Estate. The pendency of most litigation matters usually demonstrates that such proceedings are highly unpredictable with unknown results until brought to finality (whether through the courts or otherwise).
By applying the Tax Court's reasoning in Estate of Wheeler28 to prove fraud, the IRS would have to prove by clear and convincing evidence that the executors intended to defraud the government by "calculated tax evasions" and that the executors engaged in "conduct which had as its specific purpose the evasion of a tax known or believed to be owing." Consequently, by including a Statement with the 706, it appears to be extremely doubtful that the executors of an estate could have acted with such intent, particularly when they disclosed the details of the litigation on the 706 and most likely could not have possibly known (nor could be imputed to know) the final results of such litigation.
Even assuming a duty to file a Supplemental 706 existed, and if it is further assumed that no fraud occurred with the filing of the 706 and after the litigation is resolved that the executors intentionally and willfully elected not to file a Supplemental 706, there should still not be a finding of fraud under Section 6501 (c)( 1 ) as to the 706 because the decision to file a Supplemental 706 is not relevant as to the executors' intent upon the initial filing of the 706.29 In other words, the IRS could not apply the exception in Section 6501(c)(1) by arguing that a fraudulent intent was developed after a resolution occurred which allowed the estate to properly determine its tax liability.
As for the substantial omission exception, in an analysis of Section 6501(e)(2), the focus is on the second sentence, which provides: "in determining the items omitted from the gross estate, there shall not be taken into account any item which is omitted from the gross estate in the return if such item is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the Secretary of the nature and amount of such item" (emphasis added). Although later events may dramatically change the estate tax liability, so long as there was sufficient disclosure on the 706 or in a Statement attached thereto, Section 650 1 (e)(2) cannot apply even where the omitted value exceeded the 25% Test. Sufficient disclosure has been found where a general description of possible omitted items was given with an explanation of why the value was unknown and unknowable at the time of filing the return so that it could not be included at that time.30
The substantial omission exception is actually a two part test: (1) the 25% Test, and (2) that there was a lack of adequate disclosure of such omitted items. If the IRS can satisfy both parts, the six-year rule applies instead of the three-year general rule under Section 6501(a). Section 6501 (e)(2) applies to innocent as well as negligent omissions, and an analysis of the facts under this statute does not require a proof of fraudulent intent.31
The previously cited case of Williamson I provides helpful analysis on the determination of "adequate disclosure." In Williamson I, the IRS attempted to assess a deficiency after the close of the 3-Year Period but prior to the close of a potential six-year limitations period. The executor of the Williamson estate asserted that the IRS was time-barred from assessment since the three-year statute of limitations had already expired. The IRS argued that the six-year statute applied under Section 6501(e)(2) due to a substantial omission.
The Tax Court focused its analysis on the adequate disclosure requirement and, citing several prior opinions, stated that disclosure may be adequate even without revealing exact dollar amounts, so long as the statement was sufficiently detailed so that a decision whether to select the return for audit may be a reasonably informed one.32 Because the executor included an explanatory statement with the 706 and because the results of the pending suit were still unknown when the 706 was filed on 9/30/88, the Tax Court held that the statement gave adequate notification to the IRS.33 Thus, the three-year statute of limitations applied rather than the six-year limitations period under Section 6501(e)(2). Therefore, the IRS was barred from further assessments.
Preparer issues and Circular 230
Although it has been reasoned that (1) a Supplemental 706 is not required to be filed and (2) exceptions to the 3-Year Rule may be avoided through the inclusion with the 706 of a Statement adequately disclosing the litigation, the preparer should nevertheless be aware of the ramifications of "tax preparer" duties under both the Code and IRS Circular 230.
An in-depth analysis of Circular 230 is beyond the scope of this article. Nevertheless, any such analysis would conclude that the answer to whether Circular 230 applies to a practitioner in this particular situation is not as definitive as perhaps it should be, and the lack of substantive authority on this issue should cause some concern on the part of practitioners and fiduciaries.
Section 10.21 of IRS Circular 230 provides as follows:
A practitioner, retained by a client to represent the client before the IRS, who (1) knows that the client has not complied with the federal tax laws or (2) knows that the client has made an error or omission on any return, document, affidavit, or other paper that the client submitted to the IRS, must promptly advise the client that ( 1 ) the client's action or inaction is a noncompliance, error, or omission with regard to such tax laws and (2} of the penalties that may be incurred if the client does not correct his or her noncompliance, error, or omission.34
The inclusion of additional assets in the Gross Estate may be deemed to be an omission of assets, thus triggering taxpayer action under Section 10.21 of Circular 230. However, if this is the case, the practitioner is required only to advise the client of the omission. Circular 230 does not mandate that a practitioner (1) insist that the client correct the omission, (2) report a client's failure to correct the omission, or (3) discontinue representation of a client who declines to correct an omission.38 Furthermore, Circular 230 does not impose a requirement on the taxpayer to file a supplemental return to correct any such error.
With respect to a Supplemental 706, the practitioner may consider advising the executor that, while the law does not require the executor to file a Supplemental 706, it is suggested that one nevertheless be filed. Such advice appears to comply with the notification requirements of Circular 230 and allows the executor to weigh the advantages and disadvantages of filing.
Issues to consider if filing a Supplemental 706
If the practitioner elects to provide the executor with the advice referenced above, the executor must then decide whether to ignore the legal conclusions reached above and nevertheless file a Supplemental 706. If estate taxes are paid with a Supplemental 706, interest and penalties on such taxes would likely be owed.36 The effect of such payments would be to prevent the imposition of further interest (and penalties) on the amounts paid. Moreover, any interest paid with such taxes should be deductible for federal estate tax purposes.
On the other hand, the filing of a Supplemental 706 in the absence of a mandatory filing requirement could have two negative effects on the estate. First, the likelihood of whether an estate tax assessment would occur must be determined, as this may affect an executor's fiduciary obligations to preserve the estate. If it is determined that it is highly unlikely that any additional estate taxes would be assessed prior to the end of the 3-Year Period, the payment of any such amounts (including penalties and/or interest) could be deemed to be to the detriment of the estate beneficiaries and a breach of the executor's fiduciary duty to maintain and preserve the estate. Conversely, the payment of such taxes could arguably be considered to be within the executor's fiduciary's duty to maintain and preserve the estate by minimizing the impact of further interest and penalties on any outstanding estate taxes.
Second, the filing of a Supplemental 706 could allow the IRS to re-examine matters that it had previously deemed closed. Upon its approval of a 706 as filed or at the conclusion of an audit, the IRS generally sends an estate tax "Closing Letter" to the executor, which is evidence that the 706 either has been accepted as filed or has been accepted after an audit adjustment.37
The Closing Letter is designed to provide a measure of assurance that the estate's federal estate tax liabilities have been satisfied, thus permitting the closing of the probate estate at the local level. However, unless the executor enters into a negotiated closing agreement with the IRS, the mere issuance of a Closing Letter does not prevent the IRS from reopening an examination of a 706 to determine a deficiency.38 Thus, careful consideration should be given as to the filing of supplemental information with respect to estates to which a Closing Letter has already been received with respect to the originally filed 706. The filing of a Supplemental 706 may be the catalyst for an additional estate tax audit which might not otherwise have occurred and allow the IRS to review previously closed issues. Such new analysis could result in additional estate tax assessments that may otherwise have been avoided.39
Conclusion
There is no explicit requirement in the Code, the Regulations, or as interpreted by the courts or any IRS pronouncements that a Supplemental 706 must be filed where the value of an estate changes as a result of litigation. Hence, if a litigation matter either results in additional assets being attributed to a decedent's Gross Estate and/or results in an additional estate tax liability to the estate, the estate is nevertheless not required to file a Supplemental 706, even if such attribution occurs prior to the expiration of the 3-Year Period.
If the resolution of the matter occurs prior to the expiration of the 3-Year Period, the IRS may still assess any additional federal estate taxes, penalties and interest as may be due up to the end of the 3-Year Period. This may occur despite the estate having previously received a Closing Letter from the IRS.
To maintain the 3-Year Period, the executors should file a Statement with the 706 that adequately discloses the litigation. By such disclosure, the executors can argue that there was no intent to evade the estate tax at the time of the filing of the 706, and, further, such disclosure should avoid any argument of a "substantial omission of assets" which would increase the 3-Year Period by three additional years.
The preparer of the 706 should be aware of potential Circular 230 issues and that notwithstanding the legal conclusions, a Supplemental 706 may be required to be filed. Finally, the executor must consider all aspects of the analysis in determining whether to file a Supplemental 706. Such aspects include the potential breach of the fiduciary duty to maintain and preserve the estate and the impact on the estate and the beneficiaries.
1 Throughout this article, references to the "Taxable Estate" are to the "taxable estate." as defined in Section 2051 . as finally determined for tederai estate tax purposes References to the "Gross Estate' are to the "gross estate," as defined in Section 2031. as finally determined for federal estate lax purposes.
2 See Section 650 1(a)
3 See. e.g., Harrington, as updated by Moore, Selected Procedural Issues in Estate and Gift Tax Controversies. ALI-ABA Course of Study. Estate Planning in Depth, p. 651 (June 2006).
4 See Reg 1.461 -1(a)(3) (if a taxpayer ascertains that an Item should have been included in gross income in a prior taxable year, the taxpayer should file an amended return)
5 Reg 20.6081-1
6 464 U.S. 386. 53 AFTR2d 84-446 (1984).
7 Badaracco. 464 U S at 393. see also IRS Office of Chief Counsel memorandum. SCA 1998-024 (the Badaracco opinion referred to. and was consistent with an extensive body of law cited for the general proposition that an "amended return" is a nullity for most purposes (apart from refund claims)).
8 "Estate taxes payable." as used in this sentence, does not refer to estate taxes assessed or paid, the concept is whether any such additional taxes payable must actually be paid.
9 TCM 1996-426 ("Williamson I")
10 The probate court entered an order approving the settlement on 1/14/91.
11 Section 6501(a) (three-year period tor assessment commences on the day after the return is filed)
12 Estate of Williamson, TCM 1997-77 ("Williamson II"), in such case, the executors ol the estate in Williamson I commenced a second action seeking recovery of the administrative and litigation costs expended in Williamson I The Tax Court, in Williamson iI. denied such request, reiterating certain conclusions (rom its opinion in Williamson I.
13 The settlement itself occurred 97. months before the statute of limitations would have expired and any analysis by the Tax Court of whether the taxpayer was required to file (or even should have filed) a Supplemental 706 at that point, or even when the executor became aware of the values on 9/19/91. was entirely absent from both the Williamson /and Williamson II opinions
14 See Zellerbach Paper Co. v. Helvering, 293 U.S 172, 14 AFTR 688 (1934) (a return Is sufficient if it purports to be a return, is sworn to as such, and evinces an honest and genuine endeavor to satisfy the law)
15 See Beard. 82 TC 766, 777 (1984). aff'd per cur., 793 F.2d 139. 58 AFTR2d 86-5290 (CA-6, 1986).
16 Secllons 6665 and 6671(a); Reg. 301 6671-1(a)
17 Peyser, 627-3rdTM. (BNA). Limitations Periods. Interest on Underpayments and Overpayments, and Mitigation, at p. A-5
18 Sections 6665(a) and 6671(a); Reg. 301.667l-1(a).
19 Reg 301 66011(f)(1).
20 Sections 6601(e)(1) and 6601(e)(2). Reg. 301 6601 -1(f)(1) Interest on the underpayment begins on the due date of the return (determined without regard to any extension of time for payment). Reg. 301.6601-1(a)(1) interest on the penalty begins to accrue on the due dale (including extensions) of the return to which the penalty relates Section 6601(e)(2).
21 The IRS must prove by clear and convincing evidence that the taxpayer's return was false or fraudulent in order for the statutory fraud exception to the statute of limitations to apply. Payne, 224 F.3d 415 86 AFTR2d 2000-5647 (CA-5. 2000); Neely, 1 16 TC 79 (2001) (IRS must prove that the taxpayer intended to conceal, mislead, or otherwise prevent the collection of taxes).
22 Estate of Wheeler. TCM 1978-15 Toledano 362F.2d243. 17AFTR2d 1268 (CA-5. 1966) (the mere existence ol deficiencies does not establish fraud per se).
23 Section 7454, Rule 142(b). Tax Court Rules of Practice and Procedure, see Estate of Wheeler, supra note 22 (the IRS cannot rely on the presumption of correctness for the purpose of sustaining deficiencies barred by the statute of limitations but for the existence of fraud).
24 Estate of Wheeler, supra note 22 (it is not enough to contend that the taxpayer's explanation of the alleged underreported items is inadequate) citing Mitchell. 1 18 F.2d 308. 26 ARR 684 (CA-5, 1941); Stratton, 54 TC 255 (1970); and Maycock 32 TC 966. 974 (1959)
25 See Estate of Wheeler, supra note 22. citing Arnold. 14 B TA 954 (1928). Dreiborg. 225 F 2d 216, 47 AFTR 1830 (CA-6, 1955); Klernach, TCM 1971-169; and Hauser, TCM 1970-201. The Wheeler court's discussion regarding the timing of the fraudulent intent was discussed in the context of an imposition of a penalty (based on fraud) However, the Wheeler case involved both estate tax deficiencies assessed as well as the addition to tax for a fraud penalty, and in both issues, evidence from the IRS of fraudulent intent by the taxpayer was necessary in addition, the burden of proof in fraud pursuant to Section 7454 (which the court cited) applies Io any proceeding involving the issue whether the petitioner has been guilty of fraud with intent to evade tax." The language of Section 6501(c)(1) tracks the language [fraudulent return] with intent to evade tax." Thus, the logic applied by the Wheeler court that "the test is the intent at or before the time the return is filed, not some later date" arguably applies as well in determining a finding of "intent" tor a fraudulent return in the context of an unlimited period of assessment pursuant to Section 6501(c)(1).
26 The six-year rule applies to innocent as well as negligent omissions, and therefore does not require an "intent" to evade tax as do Sections 6501(c)(1) and 6501(c)(2).
27 Section 6501(e)(2); Estate of Williamson, supra note 9, citing Estate of Frane. 98 TC 341. 355 (1992). aff'd in part and revd in part. 998 F2d 567, 72 AFTR2d 93-5268 (CA-8. 1993).
28 Supra note 22.
29 Based on the hypothetical duty to file a Supplemental 706 as set forth in the fact pattern for this example, the fraud argument would apply as to the Supplemental 706.
30 See Estate of Williamson, supra note 9 (estate tax return with statement explaining that the decedent's community property was unknown, and therefore the value was unknown, at the time of filing due to pending litigation with the surviving spouse, held to be adequate disclosure notwithstanding a lack of a specific amount stated): see also Morris. TCM 1966-245 (statute does not require a specific disclosure of the dollar amount omitted).
31 Id.
32 Williamson I1 supra note 9, at 2996. citing Quick Trust, 54 TC 1336 (1970), aff'd 444 F.2d 90, 27 AFTR2d 71-1581 (CA-8. 1971): University Country Club, Inc., 64 TC 460. 470 (1975); Morris, supra note 30, and Estate ol Frane, supra note 27.
33 See also Morris, supra note 30 (Tax Court found adequate disclosure by taxpayer for purposes of application of the three-year statute of limitations where affidavit attached to taxpayer's income tax returns stated taxpayer had no information concerning the nature and amount of her husband's earnings and that because of this, she was unable to determine the amount of income allocable to her by reason of her community share of such earnings). The Morris court stated that intent behind the disclosure was not relevant so long as the disclosure itself apparently apprises the IRS of the omission, and that the language of the statute does not require a specific disclosure of the dollar amount omitted.
34 31 CFR § 10.21. See also 67 Fed. Reg. 48.760. 48.763 (7/26/02). stating that this requires the practitioner "to provide information that taxpayers who consult tax professionals typically expect to receive."
35 Zaritsky, Practical Estate Planning Under Circular 230. H 1 .06 (Thomson Reuters/WG&L, 800-950-1216). which provides, in footnote 59, the following. "It is not clear whether this represents an unwillingness by the Treasury Department to impose an undue burden on practitioners, to impose on them duties that may be prohibited by other ethical rules (particular those prohibiting the attorney or CPA from divulging client confidences), or, perhaps, an incredibly naive belief that a client who is told of the need to correct a noncompliance, error, or omission will do so."
36 It is possible that penalties could be abated
37 See Peebles and Janes. 822- 2nd TM. (BNA). Estate, Gift, and Generation-Skipping Tax Returns and Audits, at ? A-80.
38 See Estate of Bommer. TCM 1995-197
39 See Peebles and Janes, supra note 37, at ? A-80 (supplemental information tiled will allow the IRS to fully audit the return even after the closing of the statute of limitations, although that audit cannot result in an assessment of a greater tax than the greatest amount reported by the estate in its filings).
DAVID PRATT AND GEORGE D. KARIB JANIAN, ATTORNEYS
DAVID PRATT, of the New York and Florida Bars, is a partner in the Personal Planning Department of the law firm of Proskauer Rose LLP and is a managing partner of the Boca Raton, Florida, office. He is also a Fellow of the American College of Trust and Estate Counsel and the American College of Tax Counsel, as well as a CPA. Mr. Pratt is Florida Board-Certified in both Taxation and Wills, Trusts and Estates, and is an adjunct professor at the University of Florida's Levin College of Law. GEORGE D. KARIBJANIAN, of the Pennsylvania and Florida Bars, is senior counsel with the law firm of Proskauer Rose LLP, in the Boca Raton office. The authors have written and lectured extensively on estate planning.
Copyright Thomson Professional and Regulatory Services, Inc. Sep 2009