In PLR-138574-10 the IRS ruled in favor of the taxpayer regarding a taxpayer's request for an extension following a failure to allocate the GST exemption.
Taxpayers in question were married with three children and established four irrevocable trusts (one family trust and three children's trusts), all of which have GST potential. The taxpayer retained a professional tax preparer, whom In filling out IRS Form 709, only the gifting spouse's half was accounted for (gifting spouse and his/her spouse each account for half the gift). The taxpayer sought a good-faith extension to correct the issue and properly allocate the GST exemption.
Section 2642(g)(1)(a) of the Gift Tax Regulations states that the Secretary will prescribe the procedures under which extensions will be granted to allocate GST exemptions. 2642(g)(1)(b) states that the Secretary is to take all relevant circumstances in consideration in determining whether to grant relief.
26 CFR 301.9100-3 states that requests for relief will be granted when the taxpayer provides evidence establishing that the taxpayer acted "reasonably and in good faith and that granting relief will not prejudice the interests of the government." 26 CFR 301.9100-3(a).
Section 301.9100-3(b)(1)(v) provides that a taxpayer is deemed to have acted reasonably and in good faith if the taxpayer reasonably relied on a qualified tax professional, including a tax professional employed by the taxpayer, and the tax professional failed to make, or advise the taxpayer to make, the election."
The taxpayer was found to satisfy the 301.9100-3 requirements, and an extension was granted.
Posted by Michael Nissenbaum, Associate Editor, Wealth Strategies Journal.
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