Protective Election For Installment Payment of Federal Estate Tax Does Not Extend Statute of Limitations

The IRS sought to collect estate taxes.  The estate had made a protective election preserving the estate's ability to make an installment payment election under I.R.C. Sec. 6166 if the estate were later determined to be eligible to make the election.  About four years later, IRS issued a Notice of Deficiency and the estate moved for a redetermination of tax.  The court entered a stipulated decision for a deficiency which IRS assessed in April of 2005.  In late 2006, the IRS issued a final notice to levy and notice for hearing.  In early 2007, the estate requested a due process hearing and IRS responded to that request in May of 2008.  The estate argued that the collection of the original tax assessment was barred by the statute of limitations.  The court noted that a 10-year  statute of limitations for collection of estate taxes applied under I.R.C. Sec. 6502(a).  The estate claimed that the IRS action was filed more than 10 years after the date of the original assessment.  The IRS claimed that additional tolling was available under I.R.C. Sec. 6166 and 6503(d) which would extend the statute of limitations.  The court noted that the estate did not receive an extension of time to pay tax, but had merely made a protective election which did not extend the statute.  United States v. Baileys, No. 8:13-cv-966-JLS (CWx), 2014 U.S. Dist. LEXIS 67822 (C.D. Cal. Mar. 25, 2014).