The IRS has released a procedure (Rev Proc 2022-32) that provides a new, simplified method for obtaining an extension of time to make a “portability” election. A portability election allows a surviving spouse to apply a deceased spouse’s unused exclusion (DSUE) amount to their own transfers during life or at death.

New simplified method

The new procedure allows certain estates to use to obtain an extension of time to elect portability of a DSUE amount. The procedure applies to estates that are not normally required to file an estate tax return because the value of the gross estate and adjusted taxable gifts is under the filing threshold and the decedent has a surviving spouse. 

Under the new procedure, an extension request must be made on or before the fifth anniversary of the decedent’s death. This simplified method, which doesn’t require a user fee, should be used in lieu of the letter ruling process.

Procedure 2017-34 superseded

In 2017, the IRS published Rev Proc 2017-34, which provided a simplified method for obtaining an extension of time to make a portability election for an estate wasn’t required to file an estate tax return and the decedent had a surviving spouse. This procedure was to be used in lieu of the letter ruling process and was available up to the second anniversary of the decedent’s date of death.

Since the publication of Rev Proc 2017-34, the IRS issued numerous letter rulings granting an extension of time to elect portability in situations in which the decedent’s estate was not required to file an estate tax return and the time for obtaining relief under the simplified method had expired. According to the IRS, these requests place a significant burden on the IRS’s resources. Therefore, the new procedure supersedes Rev Proc 2017-34.

Effective date: Generally, Rev Proc 2022-32 is effective 7/8/2022, and it is the exclusive method for obtaining an extension of time for estates meeting the requirements in the procedure. Therefore, the IRS will no longer issue letter rulings granting an extension of time to make a portability election on or before the fifth anniversary of the decedent’s date of death for estates that qualify to use the simplified method. 

If an estate has filed a request for a letter ruling seeking an extension of time to make a portability election and that letter ruling is pending in the National Office on 7/8/2022, the Office of the Associate Chief Counsel (Pass-throughs and Special Industries) will close its file on the ruling request and refund the user fee, and the estate may obtain relief only by complying with Rev Proc 2022-32.

(This is Blog Post #1264)