IRS reduces user fee for estate tax closing letters

The IRS issued interim final and proposed regulations Friday (T.D. 10031 and REG-107459-24) lowering the user fee for the Service to issue an estate tax closing letter from $67 to $56.

An estate tax closing letter (Letter 627) confirms that the IRS has accepted an estate tax return (generally, Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return) as filed or after the Service has made an adjustment to which the estate has agreed (see Notice 2017-12).

It specifies some estate tax return information, such as the amounts of the net estate tax, any state death tax credit or deduction, and any generation-skipping transfer (GST) tax for which the estate is liable, but it does not indicate how much has been paid in estate tax or GST tax.

The receipt of an estate tax closing letter generally indicates that, for purposes of determining the estate tax liability of the decedent’s estate, the estate tax return’s IRS examination is closed. An estate tax closing letter, however, is not a formal closing agreement.

The IRS set the $67 user fee in final regulations issued in September 2019. Before that, the IRS issued closing letters free of charge. The fee is subject to a biennial review of the costs of providing certain special services to persons beyond those provided to the general public. In its 2021 biennial review, the IRS determined that the full cost of issuing estate tax closing letters to authorized persons remained $67.

In its 2023 biennial review, however, the Service determined that cost was $56.

The $56 user fee applies to requests for estate tax closing letters received by the IRS after the regulations are published in the Federal Register, which is scheduled for Tuesday.

— To comment on this article or to suggest an idea for another article, contact Paul Bonner at Paul.Bonner@aicpa-cima.com.