IRS Updates Simplified Method for Portability Election

The IRS issued a simplified method for taxpayers to obtain an extension to make a portability election on July 8, 2022. This new publication, Rev. Proc. 2022-32,2022-1 IRB 144, has superseded the 2017 publication, Rev. Proc. 2017-34,2017-26 IRB 1282.

A portability election is an election that allows a surviving spouse to apply a deceased spouse’s unused exclusion, also known as their “DSUE” amount, to be transferred to the surviving spouse for any Federal estate and gift tax purposes during their life or at death. The portability election is only applicable after December 31, 2010. Originally, portability was only supposed to be a temporary provision and was scheduled to expire on January 1, 2013; however, portability is now permanent because of the American Taxpayer Relief Act of 2012.

In June 2017, Rev. Proc 2017-34, 2017-26 IRB 1282 was published by the IRS, which allowed decedents an extension of time to make a portability election who had no filing requirements to file an estate tax return. The original simplified method procedure was established during this publication. Compared to the past, taxpayers now had no filing requirements to file an extension and can make an extension up to two years of the decedent’s date of death. If there was an election made past the two years, a letter may be written to request a letter ruling.

IRS Provides Simplified Method for Extending Portability Election

Listen in as Rebecca Alicea, Esq. and Maria Carvalho, MBA discuss the IRS updates to the simplified method, how this came to be, what legislation was in place before and what portability election is, in our latest episode of Taxing Topics.

After this publication, there was a large influx of letters sent to the IRS, which has been a significant burden on the IRS’s resources. As a result, the IRS published Rev. Proc. 2022-32,2022-1 IRB 144, which expands the simplified method established in 2017. An extension of time can now be obtained to make a portability election up to five years from the descendants’ date of death, which is used in place of writing a letter.

Any pending letter ruling seeking an extension of time to make a portability election still on file as of July 8, 2022, will be closed by The Office of the Associate Chief Counsel (Passthroughs and Special Industries) and will refund the user fee. The estate will now receive relief by complying with Rev. Proc 2022-32.

Authors: Maria Carvalho, MBA | [email protected] and Rebecca Alicea, Esq., Principal | [email protected]

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