If you are appointed as executor, administrator, or personal representative (What are the duties of a personal representative?) of an estate, you are responsible for filing a tax return. An estate tax return must be filed within 9 months of the decedent’s death. Internal Revenue Code §6075. You may file for an extension for no more than 6 months. IRC § 6081. If you fail to file a timely return, the IRS will assess a penalty equal to 5% of the amount required to be shown as tax on the delinquent return for each month during which the return remains delinquent.

The only way to avoid the penalty is to show that the failure to file was due to “reasonable cause” and not “willful neglect.” Reasonable cause is established where, despite the exercise of ordinary business care and prudence, a taxpayer is unable to timely file. Willful neglect is a “conscious, intentional failure or reckless indifference.” Reasonable cause may be established by relying upon the advice of an attorney. “However, a taxpayer’s reliance on the advice of an attorney with respect to matters such as meeting filing deadlines generally does not constitute reasonable cause.” Estate of Gertrude Zlotowski, Docket No. 22150-04 (July 24, 2007). In addition, relying solely on an attorney’s advice is likely an impermissible delegation of your duties as a personal representative of the estate.

“Congress has placed the burden of prompt filing on the executor, not on some agent or employee of the executor” except in a very narrow range of situations (such as erroneous advice that a return was not needed at all). United States v. Boyle, 469 U.S. 241, 249-250 (1985). If you are preparing to assume the duties of a California personal representative, it is important that you consult with a San Diego probate lawyer who can provide guidance on return preparation, filing deadlines, and other issues that could land you in hot water should you fail to spot them.

Filed under: Estate Administration, Estate Planning - Generally, Estate Tax, Probate, San Diego Estate Planning