Key Takeaways
- The IRS Estate Tax Closing Letter provides official confirmation that Form 706 estate tax examination is complete and no additional taxes are owed to the federal government
- Closing letters aren't issued automatically, executors must proactively request them by phone or in writing after Form 706 is filed and any estate tax due is paid
- Probate courts in many jurisdictions require closing letters before granting final discharge to executors, and financial institutions often request them before releasing significant estate assets
- IRS estate tax processing is notoriously slow, with closing letter requests taking 6 to 12 months or longer depending on examination complexity and IRS staffing levels
- Keep the original closing letter with permanent estate records and provide copies to probate court, financial institutions, and beneficiaries as part of final accounting documentation
{{blog-cta-checklist-small}}
Why the Estate Tax Closing Letter Matters
Form 706 U.S. Estate (and Generation-Skipping Transfer) Tax Return applies only to estates exceeding the federal exemption amount $13.61 million for individuals dying in 2024 and $13.99 million for 2025. While most estates never reach these thresholds, those that do face extensive IRS examination and documentation requirements.
The estate tax closing letter serves multiple critical functions. It provides definitive proof that the IRS completed its examination of Form 706 and accepted the return as filed or with agreed-upon adjustments. It confirms no additional federal estate taxes are due. It formally closes the IRS examination period, preventing future IRS claims against the estate except in cases of fraud or substantial understatement.
Many probate courts require closing letters before final discharge. Judges want assurance that all tax obligations are satisfied before releasing executors from fiduciary responsibility. Without the closing letter, courts may refuse to approve final accounting and grant discharge even if all other estate administration tasks are complete.
Financial institutions holding significant estate assets often request closing letters before releasing funds or transferring property. Banks, brokerage firms, and title companies use closing letters to verify no federal tax liens exist against estate assets. This protects them from liability for releasing assets that might be subject to unpaid estate taxes.
The closing letter protects executors from future IRS claims. Once issued, the letter significantly limits IRS ability to reopen examination or assess additional taxes. This protection is valuable given executors' potential personal liability for unpaid estate taxes if they distribute assets prematurely.
What You'll Need
Before requesting an estate tax closing letter, ensure you have comprehensive documentation of Form 706 filing and any estate tax payments.
Obtain a complete copy of the filed Form 706 including all schedules, attachments, and supporting documentation submitted to the IRS. Keep this full return package with your estate records as it may be referenced during IRS examination.
Gather proof of any estate tax payment. If estate tax was due, collect canceled checks, electronic payment confirmations, or bank statements showing payment to the IRS. Include documentation of payment date and amount for your records.
Have the estate's EIN (Employer Identification Number) readily available. All IRS correspondence about the estate references this tax identification number, and you'll need it when requesting the closing letter.
Keep your Letters Testamentary or Letters of Administration accessible. The IRS may request proof of your authority to act for the estate when you request the closing letter or during any examination correspondence.
Locate IRS contact information for estate tax matters. Form 706 instructions include specific phone numbers and addresses for the IRS Estate and Gift Tax division. These specialized contacts handle closing letter requests rather than general IRS phone lines.
Step 1: Confirm Form 706 Filing and Payment
Before requesting a closing letter, verify that Form 706 was properly filed and any estate tax due was fully paid. The IRS won't issue closing letters for estates with unresolved filing or payment issues.
Verifying Form 706 Submission
Confirm the date Form 706 was filed. If filed by mail, check certified mail receipts and return receipt cards showing delivery to the IRS. If e-filed (available for some preparers), save electronic filing acknowledgments confirming IRS acceptance.
Review IRS correspondence received after filing. The IRS typically sends an initial acknowledgment letter confirming they received Form 706 and assigned it to an examiner. This letter includes contact information for the assigned examiner or estate tax office handling the return.
If significant time has passed since filing with no IRS correspondence, consider calling the IRS Estate and Gift Tax division to verify they received the return and it's in their processing system. Returns occasionally get lost or misrouted, and early verification prevents lengthy delays.
Confirming Estate Tax Payment
If Form 706 showed estate tax due, verify payment was made and cleared. Check bank statements confirming the payment processed and funds were withdrawn. Save copies of canceled checks or electronic payment confirmations showing payment date, amount, and that funds went to the U.S. Treasury.
If you arranged payment plans for estate tax due, confirm all installment payments are current with no outstanding balances. The IRS won't issue closing letters until all payment obligations are satisfied.
Keep all payment documentation with your estate tax records. These materials support your request for a closing letter and demonstrate the estate met all financial obligations.
Step 2: Request the Estate Tax Closing Letter
The IRS does not automatically issue estate tax closing letters after processing Form 706. Executors must proactively request them, often waiting many months for response.
When to Request the Closing Letter
Wait until Form 706 has been filed for at least six months before requesting a closing letter. The IRS needs time to process the return, conduct initial examination, and potentially request additional information before issuing the letter.
If the IRS sent correspondence requesting additional information, appraisals, or documentation during examination, wait until all requested materials have been submitted and acknowledged before requesting the closing letter. Premature requests while examination is ongoing won't be processed.
For estates claiming portability of a deceased spouse's unused exemption, ensure that election was properly made on Form 706. Closing letters for portability elections follow similar procedures but involve additional IRS review.
How to Request by Phone
Call the IRS Estate and Gift Tax division using the phone number in Form 706 instructions. This specialized division handles estate tax matters rather than general IRS customer service.
When you reach an IRS representative, clearly state you're requesting an estate tax closing letter for Form 706. Provide the estate name exactly as it appears on Form 706, the estate's EIN, the date Form 706 was filed, and your name and capacity as executor.
Be prepared to answer questions about the return. The IRS may ask about specific assets, valuations, deductions, or other return details. Having the filed Form 706 available during the call helps you respond accurately.
The representative will likely create a request in the IRS system and provide an estimated timeframe for response. Request a reference number for your closing letter request to use when following up.
How to Request in Writing
Alternatively, submit a written request for the estate tax closing letter to the IRS address listed in Form 706 instructions for estate tax matters. Address the letter to the IRS Estate and Gift Tax division.
Include the estate name and EIN prominently at the top of your letter. State clearly that you're requesting an Estate Tax Closing Letter for Form 706. Provide the date Form 706 was filed and confirmation that any estate tax due was paid.
Include your contact information, capacity as executor, and attach copies of Letters Testamentary or Letters of Administration proving your authority. Sign the letter as executor.
Send the written request by certified mail with return receipt requested. Keep copies of your request letter and postal receipts with your estate records.
Following Up on Your Request
If you haven't received the closing letter within 3 to 4 months of your request, follow up with the IRS. Call the Estate and Gift Tax division again, referencing your initial request date and any reference number provided.
Be persistent but patient. IRS estate tax processing is notoriously slow, especially during periods of staffing shortages or budget constraints. Multiple follow-up calls are often necessary.
If the IRS indicates they need additional time or information, provide requested materials promptly and document all communications. Each delay extends the timeline for receiving the closing letter.
Step 3: Receive and Distribute the Closing Letter
When the IRS finally issues the estate tax closing letter, treat it as a critical estate document requiring careful handling and distribution.
Securing the Original Letter
The closing letter arrives by U.S. Mail to the address listed on Form 706. Open it immediately upon arrival and verify it's the official closing letter rather than a request for additional information.
Read the letter carefully. It should clearly state that examination of Form 706 is complete and no additional estate tax is due. Note any conditions or limitations mentioned in the letter.
Place the original letter in the estate's permanent records. This document has long-term value proving the IRS closed estate tax examination. Store it securely with other critical estate documents like the will, probate court orders, and property deeds.
Making Copies for Distribution
Make multiple copies of the closing letter for various purposes. You'll need copies for probate court if required in your jurisdiction, financial institutions holding estate assets that requested the letter, your attorney and CPA for their files, and beneficiaries as part of final accounting documentation.
Certified copies may be required for some purposes. Check with your probate court and financial institutions about whether they need certified copies or if standard photocopies are acceptable. Some courts require copies certified by you as executor attesting they're true copies of the original.
Submitting to Probate Court
If your jurisdiction requires the closing letter for final discharge, submit a copy with your final accounting and petition for discharge. Include the closing letter with other tax documentation showing all tax obligations were satisfied.
The court reviews the closing letter as confirmation that federal estate tax matters are resolved. This satisfies one of the requirements for granting final discharge and releasing you from further executor responsibilities.
Common Challenges with Closing Letters
Several issues frequently complicate the process of obtaining estate tax closing letters. IRS estate tax processing moves extremely slowly. Closing letter requests routinely take 6 to 12 months or longer depending on IRS staffing levels, examination complexity, and how backed up the Estate and Gift Tax division is at the time.
No automatic issuance means executors must know to request the letter and take initiative to follow up. Many executors assume the IRS will send the letter automatically after processing Form 706, only discovering months later that no letter will come without a specific request.
The IRS may ask questions or request additional documentation during examination before issuing the closing letter. Common requests include independent appraisals for real estate or business interests, documentation supporting claimed deductions, and explanations of transactions occurring near death that affect estate value.
Estate tax examination can extend far beyond the initial filing. While the IRS technically has three years from filing to assess additional taxes, complex estate examinations often take longer with examiner requests, executor responses, and negotiations about valuations extending the process.
Courts and financial institutions refusing to proceed without the closing letter create urgency that conflicts with IRS delays. Probate judges may refuse final discharge until the letter arrives. Banks may decline to release large accounts without it. These external pressures create stress when the IRS timeline extends months or years.
Legal and Financial Considerations
The estate tax closing letter provides critical legal protections for both the estate and executor. Once issued, it substantially limits the IRS's ability to reopen examination except in cases of fraud or substantial error.
Without the closing letter, the IRS examination period remains technically open for three years from filing. During this period, the IRS could assess additional taxes if they discover valuation errors, improper deductions, or other issues with Form 706.
Many probate courts require closing letters before final discharge because they want assurance all tax obligations are satisfied. Judges recognize that undisclosed or unpaid estate taxes could create future claims against distributed assets or executor liability.
Financial institutions use closing letters to verify no federal tax liens exist. A federal estate tax lien attaches to all estate property if estate tax is unpaid. Banks and title companies want confirmation no such liens exist before releasing assets or transferring property.
According to estate tax attorneys, obtaining the closing letter is one of the final major hurdles in high-value estate administration. Executors should begin the request process as early as possible and build substantial time buffers into estate closing timelines.
Timeline and What to Expect
Estate tax closing letter timelines extend far longer than most other estate administration tasks, requiring patience and persistence.
Months 0-9: After filing Form 706, the IRS processes the return and conducts initial examination. During this period, they may request additional information, appraisals, or documentation. Respond promptly to all IRS correspondence to avoid unnecessary delays.
Month 9-12: After initial examination is substantially complete, request the estate tax closing letter by phone or in writing. The IRS typically needs 3 to 6 additional months to finalize review and issue the letter after your request.
Month 12-18: Follow up on your closing letter request if it hasn't arrived. Make multiple calls if necessary. Some estates receive letters within 12 months of filing Form 706, while others wait 18 to 24 months or longer for complex examinations.
Month 18+: If significant time passes without receiving the closing letter, consider whether professional assistance from a tax attorney or enrolled agent might help accelerate the process or resolve examination issues preventing letter issuance.
Plan estate administration timelines assuming closing letter receipt will take 12 to 18 months from Form 706 filing. Don't promise beneficiaries specific distribution dates until the closing letter arrives if your court requires it for final discharge.
Conclusion
Requesting an estate tax closing letter from the IRS is a critical but time-consuming step in closing high-value estates. The letter provides official confirmation that federal estate tax obligations are satisfied and protects executors from future IRS claims.
By confirming Form 706 is properly filed and any estate tax paid, proactively requesting the closing letter rather than waiting for automatic issuance, following up persistently on your request as months pass, and properly securing and distributing the letter once received, you navigate this final major tax milestone successfully.
While IRS delays are frustrating and largely outside your control, understanding the process and maintaining patience helps you manage expectations and plan estate closure timelines realistically.
If requesting and tracking the estate tax closing letter, coordinating with IRS during extended examination, and managing the documentation requirements feels overwhelming alongside your other executor responsibilities, Elayne's platform can help request the closing letter, track IRS status, and organize all documentation needed for probate court and beneficiaries.
{{blog-cta-checklist-large}}
FAQs
Q: Do all estates need an estate tax closing letter?
No, only estates that filed Form 706 because they exceeded the federal estate tax exemption threshold need closing letters, most estates never reach this threshold.
Q: How long does it typically take to receive the closing letter?
Expect 12 to 18 months from Form 706 filing, though timelines vary based on examination complexity and IRS processing backlogs, some take 24 months or longer.
Q: Will the IRS automatically send the closing letter after processing Form 706?
No, executors must specifically request the closing letter by phone or in writing, the IRS does not issue them automatically after processing returns.
Q: Can I close the estate without the closing letter?
This depends on your probate court's requirements, many courts demand closing letters before final discharge while others may waive this requirement in certain circumstances.
Q: What if the IRS is examining Form 706 and requesting information?
Respond promptly to all IRS requests and wait until examination issues are resolved before requesting the closing letter, premature requests won't be processed.
Q: Can my attorney or CPA request the closing letter on my behalf?
Yes, if they're authorized representatives for the estate they can request the letter, though you may still need to provide proof of executor authority.
Q: What should I do if months pass without receiving the requested closing letter?
Follow up persistently by calling the IRS Estate and Gift Tax division, referencing your initial request, and asking for status updates, multiple follow-ups are often necessary.
**Disclaimer: This article is for informational purposes only and does not provide legal, medical, financial, or tax advice. Please consult with a licensed professional to address your specific situation.
