Publication 559 |
2000 Tax Year |
Personal Representative
A personal representative of an estate is an executor,
administrator, or anyone who is in charge of the decedent's property.
Generally, an executor (or executrix) is named in a
decedent's will to administer the estate and distribute properties as
the decedent has directed. An administrator (or
administratrix) is usually appointed by the court if no will exists,
if no executor was named in the will, or if the named executor cannot
or will not serve.
In general, an executor and an administrator perform the same
duties and have the same responsibilities.
For estate tax purposes, if there is no executor or administrator
appointed, qualified, and acting within the United States, the term
"executor" includes anyone in actual or constructive possession
of any property of the decedent. It includes, among others, the
decedent's agents and representatives; safe-deposit companies,
warehouse companies, and other custodians of property in this country;
brokers holding securities of the decedent as collateral; and the
debtors of the decedent who are in this country.
Because a personal representative for a decedent's estate can be an
executor, administrator, or anyone in charge of the decedent's
property, the term "personal representative" will be used
throughout this publication.
Duties
The primary duties of a personal representative are to collect all
the decedent's assets, pay the creditors, and distribute the remaining
assets to the heirs or other beneficiaries.
The personal representative also must perform the following duties.
- File any income tax return and the estate tax return when
due.
- Pay the tax determined up to the date of discharge from
duties.
Other duties of the personal representative in federal tax
matters are discussed in other sections of this publication. If any
beneficiary is a nonresident alien, see Publication 515,
Withholding of Tax on Nonresident Aliens and Foreign
Corporations, for information on the personal representative's
duties as a withholding agent.
Penalty.
There is a penalty for failure to file a tax return when due unless
the failure is due to reasonable cause. Relying on an agent (attorney,
accountant, etc.) is not reasonable cause for late filing. It is the
personal representative's duty to file the returns for the decedent
and the estate when due.
Identification number.
The first action you should take if you are the personal
representative for the decedent is to apply for an employer
identification number (EIN) for the estate. You should apply for
this number as soon as possible because you need to enter it on
returns, statements, and other documents that you file concerning the
estate. You must also give the number to payers of interest and
dividends and other payers who must file a return concerning the
estate. You must apply for the number using Form SS-4,
Application for Employer Identification Number.
Generally, it takes about 4 weeks to get your EIN. However, you
can apply by phone and get it immediately (you still need Form
SS-4). See the form instructions for how to apply.
Payers of interest and dividends report amounts on Forms 1099 using
the identification number of the person to whom the account is
payable. After a decedent's death, the Forms 1099 must reflect the
identification number of the estate or beneficiary to whom the amounts
are payable. As the personal representative handling the estate you
must furnish this identification number to the payer. For example, if
interest is payable to the estate, the estate's EIN number must be
provided to the payer and used to report the interest on Form
1099-INT, Interest Income. If the interest is payable
to a surviving joint owner, the survivor's identification number must
be provided to the payer and used to report the interest.
The deceased individual's identifying number must not be used to
file an individual tax return after the decedent's final tax return.
It also must not be used to make estimated tax payments for a tax year
after the year of death.
Penalty.
If you do not include the EIN on any return, statement, or other
document, you are liable for a penalty for each failure, unless you
can show reasonable cause. You are also liable for a penalty if you do
not give the EIN to another person, or if you do not include the
taxpayer identification number of another person on a return,
statement, or other document.
Notice of fiduciary relationship.
The term "fiduciary" means any person acting for another
person. It applies to persons who have positions of trust on behalf of
others. A personal representative for a decedent's estate is a
fiduciary.
If you are appointed to act in any fiduciary capacity for another,
you must file a written notice with the IRS stating this. Form
56, Notice Concerning Fiduciary Relationship, can be
used for this purpose. The instructions and other requirements are
given on the back of the form.
Filing the notice.
File the written notice (or Form 56) with the IRS office where the
returns are filed for the person (or estate) for whom you are acting.
You should file this notice as soon as all of the necessary
information (including the EIN) is available. It notifies the IRS
that, as the fiduciary, you are assuming the powers, rights, duties,
and privileges of the decedent, and allows the IRS to mail to you all
tax notices concerning the person (or estate) you represent. The
notice remains in effect until you notify the appropriate IRS office
that your relationship to the estate has terminated.
Termination notice.
When you are relieved of your responsibilities as personal
representative, you must advise the IRS office where you filed the
written notice (or Form 56) either that the estate has been terminated
or that your successor has been appointed. If the estate is
terminated, you must furnish satisfactory evidence of the termination
of the estate. Use Form 56 for the termination notice by completing
the appropriate part on the form and attaching the required evidence.
If another has been appointed to succeed you as the personal
representative, you should give the name and address of your
successor.
Request for prompt assessment (charge) of tax.
The IRS ordinarily has 3 years from the date an income tax return
is filed, or its due date, whichever is later, to charge any
additional tax that is due. However, as a personal representative you
may request a prompt assessment of tax after the return has been
filed. This reduces the time for making the assessment to 18 months
from the date the written request for prompt assessment was received.
This request can be made for any income tax return of the decedent and
for the income tax return of the decedent's estate. This may permit a
quicker settlement of the tax liability of the estate and an earlier
final distribution of the assets to the beneficiaries.
Form 4810.
Form 4810, Request for Prompt Assessment Under Internal
Revenue Code Section 6501(d), can be used for making this
request. It must be filed separately from any other document. The
request should be filed with the IRS office where the return was
filed. If Form 4810 is not used, you must clearly indicate that you
are making a request for prompt assessment under section 6501(d) of
the Internal Revenue Code. You must identify the type of tax and the
tax period for which the prompt assessment is requested.
As the personal representative for the decedent's estate, you are
responsible for any additional taxes that may be due. You can request
prompt assessment of any of the decedent's taxes (other than federal
estate taxes) for any years for which the statutory period for
assessment is open. This applies even though the returns were filed
before the decedent's death.
Failure to report income.
If you or the decedent failed to report substantial amounts of
gross income (more than 25% of the gross income reported on the
return) or filed a false or fraudulent return, your request for prompt
assessment will not shorten the period during which the IRS may assess
the additional tax. However, such a request may relieve you of
personal liability for the tax if you did not have knowledge of the
unpaid tax.
Request for discharge from personal liability for tax.
An executor can make a written request for a discharge from
personal liability for a decedent's income and gift taxes. The request
must be made after the returns for those taxes are filed. For this
purpose an executor is an executor or administrator that is appointed,
qualified, and acting within the United States.
Within 9 months after receipt of the request, the IRS will notify
the executor of the amount of taxes due. If this amount is paid, the
executor will be discharged from personal liability for any future
deficiencies. If the IRS has not notified the executor, he or she will
be discharged from personal liability at the end of the 9-month
period.
Even if the executor is discharged, the IRS will still be able to
assess tax deficiencies against the executor to the extent that he or
she still has any of the decedent's property.
Form 5495.
Form 5495, Request for Discharge from Personal Liability Under
Internal Revenue Code Section 6905, can be used for making this
request. If Form 5495 is not used, you must clearly indicate that the
request is for discharge from personal liability under section 6905 of
the Internal Revenue Code.
Insolvent estate.
Generally, if a decedent's estate is insufficient to pay all the
decedent's debts, the debts due the United States must be paid first.
Both the decedent's federal income tax liabilities at the time of
death and the estate's income tax liability are debts due the United
States. The personal representative of an insolvent estate is
personally responsible for any tax liability of the decedent or of the
estate if he or she had notice of such tax obligations or had failed
to exercise due care in determining if such obligations existed before
distribution of the estate's assets and before being discharged from
duties. The extent of such personal responsibility is the amount of
any other payments made before paying the debts due the United States,
except where such other debt paid has priority over the debts due the
United States. The income tax liabilities need not be formally
assessed for the personal representative to be liable if he or she was
aware or should have been aware of their existence.
Fees Received by
Personal Representatives
All personal representatives must include in their gross income
fees paid to them from an estate. If paid to a professional executor
or administrator, self-employment tax also applies to such fees. For a
nonprofessional executor or administrator (a person serving in such
capacity in an isolated instance, such as a friend or relative of the
decedent), self-employment tax only applies if a trade or business is
included in the estate's assets, the executor actively participates in
the business, and the fees are related to operation of the business.
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