IRS Issues Simplified Procedure for Making a Late Portability Election

June 12, 2017

IRS has just made it easier and much less costly to file a late Form 706 to elect portability. Effective June 9, 2017, Rev. Proc. 2017-34, creates a simplified method for making a late portability election, as long as the estate was only required to file Form 706 for the purpose of electing portability. This is a great benefit to the many executors (and their practitioners) who may miss this deadline.


Decedent's dying in 2017 can transfer (during their lifetime and/or at death) up to $5.49 million without federal estate or gift tax liability. This is called the “basic exclusion” amount. The American Taxpayer Relief Act of 2012 made permanent a “portability election,” which allows the estate of a decedent survived by a spouse to elect to transfer the deceased spouse’s unused exclusion amount (DSUE) to the surviving spouse. If the estate elects portability, the estate of the surviving spouse (at his or her death) can apply the DSUE of the surviving spouse's last deceased spouse to the surviving spouse’s transfers. In other words, portability ensures that a married couple can take full advantage of each spouse’s basic exclusion amount, without the requirement of special trusts or other estate planning techniques.

Rev. Proc. 2017-34

The difficulty is that portability must be elected on a timely filed Form 706 (Estate Tax Return). This means that the Form 706 must be filed within 9 months after the decedent’s death or by the last day of the period covered by a timely-filed extension request. This doesn’t always happen. In 2014, IRS granted a simplified procedure for requesting an extension to elect portability by issuing Rev. Proc. 2014-18. This temporary relief, however, expired at the end of 2014. Since then, the only option for relief available to an executor who missed the portability election deadline was to seek a private letter ruling. Although IRS seemed to freely grant many extensions requested via private letter ruling, the estate had the burden and significant expense of the PLR procedure, and the IRS had the burden of processing all of the requests.

Enter Rev. Proc. 2017-34. Under this new procedure, IRS will grant automatic relief under Treas. Reg. § 301.9100-3 and extend the time to elect portability for certain qualified returns.

This relief applies where:

  • The decedent was a citizen of the U.S. at death, was survived by a spouse, and died after December 31, 2010
  • The executor is not required to file an estate tax return under IRC § 6018(a) (based upon value of gross estate)(i.e. executor is only filing the Form 706 to elect portability) AND
  • The executor did not file a timely Form 706

If these requirements, are met, the executor must file the complete and properly prepared Form 706 on or before the later of (1) January 2, 2018, OR (2) the second anniversary of the decedent’s date of death. The Form 706 must state at the top that the return is “FILED PURSUANT TO REV. PROC. 2017-34 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A).”

If the executor satisfies the above requirements, the Rev. Proc. 2017-34 states that the Form 706 filed by the estate will be considered to have been timely filed under Treas. Reg. § 20.2010-2(a)(1).

Want to view entire articles or watch the videos?