Today, pursuant to Notice 2011-76 (the “Notice”), the IRS extended the due date for filing the Form 8939 from November 15, 2011 to January 17, 2012. This Notice is unexpected considering shortly ago on August 29, 2011 the IRS issued Notice 2011-66 extending the deadline for filing the Form 8939 to November 15, 2011. Rev. Proc. 2011-41 was issued on that same date providing substantive guidance in the guise of optional safe harbor guidance on electing out of the estate tax and allocating basis under section 1022. Rev. Proc. 2011-41 failed to address many substantive issues and I presume that this additional extension is to give the IRS more time to prepare the Form 8939 (which was supposed to be issued sometime early this fall) and to provide additional guidance under section 1022. Because this is an extension of the original due date, no extension request need be filed with the IRS on or before November 15, 2011 for the Form 8939.
The Notice points out that estates can extend filing a Form 706 until March 2012 by filing a Form 4768 and also essentially pre-approves an extension of time to pay the estate tax due as well. Generally, extensions of time to pay are only granted for good cause, but it does not seem to be a great leap to find that dealing with 2010 issues is de facto good cause. Of course, interest will still be charged on the tax due from the original due date.
Taxpayers cannot extend their income tax returns until next year, so the IRS provides late payment and negligence penalty relief for taxpayers who sell property inherited from a 2010 decedent. The Notice provides that such taxpayers should make a good faith estimate of their income tax liability on the sale of such property, and for purposes of the late payment and negligence penalties, the IRS will presume the taxpayer’s reasonable cause and good faith. The Notice advises such taxpayers to note at the top of their amended returns “IR Notice 2011-76”.
The saga continues …