Gift Tax - Late Submission

[nbguysf]

I received 160k as a gift from my mother last year in august; the funds were sent directly to the escrow account (it didn't go to my bank account). My mother is a US resident who doesn't work/live here or pay taxes in the United States; she lives in Peru. I believe my mother needs to file form 709, but I think we are late (it was due April 15th according to the IRS site). We thought it was due this monday May 17th. Do we have to pay a penalty for submitting late? Does my mother have to pay taxes on the gift (cash funds) she sent directly to the escrow account last year? There is a lifetime GST exemption, and I believe we qualify for that. If you could please help me understand this information before filing and whether it is fine to file this Monday May 17th or after. THANK you so much!

[ColeenD3]

The IRS announcement simply extends the due date of the 2020 Form 1040 and related tax payments from April 15 to May 17. The announcement does not extend the due date for:

1. Estimated tax payments due on April 15 for any type of taxpayer
2. Fiduciary income tax returns due on April 15, including those filed on Forms 1041, 1041-A, 5227 or 3520-A
3. Calendar-year corporation returns due on April 15
4. Fiscal-year exempt organization information returns (Form 990 series) due on April 15
5. Gift tax returns (Form 709 series) due on April 15, which will require an extension separate from the Form 1040 extension
6. Estate tax returns (Form 706)

She does have to file a Form 709, but she will not have to pay any tax. The U.S. has a unified gift and estate tax system at the federal level. Everyone has a lifetime exemption from gift and estate tax -- $11.58 million for 2020  and even after you use up your $15,000 annual exclusion, any remaining gift amount applies against your lifetime exemption amount.

[nbguysf]

Thank you so much for your response!

So since there is no tax due, is it fine to assume that filing sometime next week won't incur in any penalties? Thanks again!

[ColeenD3]

I would not assume that. The sooner you file, the better. Form 709

Late filing and late payment.

Section 6651 imposes penalties for both late filing and late payment, unless there is reasonable cause for the delay.

[nbguysf]

I am scrambling trying to finish this form for my mom as she got covid a few months ago and was unable to submit it on time. I was able to book an appointment w/ a CPA  for this coming Tuesday to make sure the 709 form is submitted correctly.  I was afraid that it will be submitted May 19th instead of May 17th, but it seems the due date was April 15th and am late anyway. 

My main concern is if we needed to pay gift taxes, but looks like we only need to report the monetary gift from 2020, correct?

[ToddL99]

Unless your mother has already made reportable gifts of more than $11,580,000, then no gift tax will be owed. You have to file Form 709 so the IRS can keep track of lifetime gifts.

From What Is the Lifetime Gift Tax Exemption?:

Starting in 2020, the lifetime gift tax exemption is $11.58 million. This means that you can give up to $11.58 million in gifts over the course of your lifetime without ever having to pay gift tax on it.