9100 Relief for Late Portability Elections by Krista Hartwell
Treasury recently updated the section 2010 Regulations to permit the IRS to grant 9100 relief for late portability elections.
On January 2, 2013, President Obama signed into law the American Tax Relief Act of 2012 (ATRA), which made permanent portability between spouses of the estate tax annual exclusion amount. Portability allows the second to die spouse to use any unused estate tax exclusion amount remaining from the first to die spouse.
Portability must be elected on a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. An estate tax return is not required unless the value of the decedent’s estate exceeds the annual exclusion amount.  If the value of the first to die spouse’s estate is significantly below the annual exclusion amount ($5.45 million for 2016), the estate of the first to die spouse may not file an estate tax return, thereby foregoing portability for the second to die spouse. The second to die spouse may need portability due to the acquisition of more assets or the significant growth in existing assets at the time of the second to die spouse’s death or significant gifting during the second to die spouse’s life.
Treasury Regulation section 301.9100-3 gives the IRS discretion to grant extensions of regulatory, but not statutory due dates (9100 relief). The Preamble to the final regulations on portability (Reg. § 20.2010-2(a)(1)), which were issued in June of 2015, notes that commenters on the proposed regulations requested that the final regulations address the availability of 9100 relief to extend the time to file an estate tax return to elect portability. The Preamble states 9100 relief is not available for estates that were required to file a timely estate tax return because such deadline is prescribed by statute. However, 9100 relief is available to estates that were not required to file an estate tax return because the due date to elect portability is prescribed by regulation, not statute. The Preamble to the final regulations cites Revenue Procedure 2014-18 in concluding that an extension of time to elect portability may be granted under regulation section 301.9100-3 to estates with a gross estate value below the threshold amount and not otherwise required to file an estate tax return.
The IRS issued Revenue Procedure 2014-18 on January 27, 2014, which authorized 9100 relief for late portability elections for estates that did not file estate tax returns. The Revenue Procedure noted the IRS had issued several private letter rulings granting extensions of time to elect portability. Relief under Revenue Procedure 2014-18 was permitted only for estate tax returns filed on or before December 31, 2014. The final regulation permitting the IRS to grant 9100 relief to make late portability elections where an estate tax return was not required and was not previously filed is regulation section 20.2010-2(a)(1). Accordingly, the IRS may grant extensions (via 9100 relief) of the due date to file a Form 706 electing portability for estate’s that were not required to timely file a Form 706.
KRISTA HARTWELL – For more information please contact Krista Hartwell at Hartwell@taxlitigator.com or 310.281.3200. Ms. Hartwell is a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez, P.C. and represents clients throughout the United States and elsewhere involving federal and state, civil and criminal tax controversies and tax litigation. Additional information is available at http://www.taxlitigator.com.
 26 U.S.C. § 6018.