Taxpayer died after filing for an extension to file a 1040 for 2018

[TechAmateur]

The taxpayer filed for a 1040 extension before April 15, 2019, understood to extend the filing deadline to October 15, 2019.
The taxpayer died.
How do I know if I have a personal obligation to file the taxpayer's return?
If so, do I have to file it on or before October 15, 2019? Or does some other date apply? (The taxpayer is a relative, but it may become difficult for me as an unpaid individual to gather all the paperwork for the return.)

[Carl]

Did the deceased have a Last Will & Testament, or do they have assets that have to go through an estate and/or probate? Examples would be if they owned their house, had a car, money in a bank, investment accounts, a retirement account (IRA, 401(k), etc.)

[TechAmateur]

Answer: A trust with a pour over will. 1040 returns were previously filed with taxpayer's social security number, with taxpayer as trustee of the trust. That is the case for the 2018 return with the extension to October 15, 2019. When taxpayer died the trust identified a substitute trustee. (The trust continues on and will be filing a 1041 in the future, with its own taxpayer ID number.)  In the past the property has been in the name of the "revocable" trust, but nothing was ever revoked. As best I can tell there is no property that's separate where the pour over will applies. 
It's important for us to know if a return has to be filed on or before October 15, 2019, the date in the original extension. Or does some other date apply? 

[dmertz · Accepted solution]

If the decedent would have been required to file a 2018 tax return had the decedent not died, the executor/personal representative of the decedent must file that tax return on behalf of the decedent.  Since the decedent had timely requested a filing extension for this tax return, the deadline for filing that tax return would be October 15, 2019.

[TechAmateur]

The above is a good answer. The problem now is for the records to be made available for filing the return by the deadline of October 15 that was understood by the now deceased taxpayer.  What's the approach on filing this if some records are available by that date but others are not? The person signing this return does not want to be held responsible with penalties, interest, etc. if not all of the deceased taxpayer's records are available.

Part 2 - The deceased taxpayer filed returns on time in all the previous years. The 2015 return was filed with an extension on October 15, 2016. Reviewing it there appear to be opportunities to amend it and for the estate to receive an additional refund. I presume from the above that the same person could file an amended return before October 15, 2019. Is that correct? This again means obtaining all the records that might be difficult to obtain by that deadline.  Are solution(s) available in this case of the matter of a deceased taxpayer, and getting all the records together?

[Anonymous_]

Your duty as estate administrator (personal representative) is to marshal the decedent's assets and prepare the requisite documents for probate and tax purposes. You should be able to locate copies of deeds, tax returns, bank and brokerage statements, et al, and proceed from that point.

With respect to liability, you can always file Form 5495 after any returns are filed on behalf of the decedent.

See https://www.irs.gov/pub/irs-pdf/f5495.pdf

With respect to the 3-year limitation, there is really nothing you can do other than filing prior to its expiration.

[dmertz]

Since the 2015 tax return was filed after the regular due date, I believe that the 3-year statute of limitations on filing to obtain a refund begins on the actual filing date, not October 15, 2016 (unless the actual filing date was October 15, 2016).  For tax returns filed before the regular due date the 3-year statute of limitations begins on the regular filing deadline, generally April 15, because tax returns filed prior to the regular due date are deemed filed on the regular due date; as far as I know there is no equivalent to that for tax returns filed after the regular due date.

Assuming that the above is correct, you would need to know the actual filing date of the 2015 tax return to determine if the statute of limitations for obtaining a refund has expired.

With regard to filing the 2018 tax return, penalties are determined based on the amount of the balance due.  If there is a refund due, there will be no penalty if the tax return is filed late.

[Anonymous_]

Re the 3-year SOL, it runs from the due date (including extensions) or the date of filing, which is later. 

Of course, returns filed prior to the due date (including extensions) are considered to have been filed on the due date for purposes of the 3-year SOL.

[dmertz]

Regarding the statute of limitations and filing under extension, see section 25.6.1.6.15 of the Internal Revenue Manual:   https://www.irs.gov/irm/part25/irm_25-006-001r

The statute of limitations clock begins on the filing date (IRM 25.6.1.9.2).  In part, IRM 25.6.1.6.15 says:

a. Early-filed Tax return.  A tax return that is filed before the due date (determined without regard to any extension of time for filing) is considered filed on the due date.

Note:
This rule does not apply to returns concerning (1) the withholding tax on nonresident aliens and foreign corporations, (2) the Federal Insurance Contributions Act, and (3) the Collection of Income Tax at Source on Wages.  The returns for (2) and (3) for any period within a calendar year are treated as filed on April 15 following the end of the calendar year. IRC § 6501(b)(2).

b. Extended Due Date.  An extended due date is not treated like the regular due date.  The filing is not considered early when the taxpayer does not use the full extension period.  A timely return received before the end of the extension period (including postponement for disaster relief and combat zone) is considered filed on the received date, not on the extended due date.  [Emphasis mine.]

[Anonymous_]

The manual is somewhat contradictory considering what appears below.

25.6.1.5 (10-01-2018)

Basic Guide for Processing Cases with Statute of Limitations Issues

1. The following is a basic guide for processing claims seeking credit or refund based on the statute of limitation:

   IF	AND	THEN
   The module is in zero balance (and claim for refund is filed within 3 years from the received date of the original return or if the claim is not filed within 3 years but within 2 years from the date tax, penalties and/or interest is paid)	The look-back period is 3 years plus any extension of time to file or the look-back period is 2 years from the date tax, penalties and/or interest is paid	The maximum amount that can be refunded or offset cannot exceed the total of the credits, payments, or offsets cycle date payments made within the look-back period. Adjust the lesser of claim document amount or the total of credits or payment within the look-back period. (If your adjustment contains an increase in the amount of Withholding Tax (W/H), Earned Income Credit (EIC), or Additional Child Tax Credit (ACTC), make correction to these amounts before inputting any other tax decrease). The claim must be disallowed if there are no credits, payments or offset payments made within the look-back period. Do not adjust the module. Send a 105C disallowance letter.

[Anonymous_]

---

@dmertz wrote:

a. Early-filed Tax return.  A tax return that is filed before the due date (determined without regard to any extension of time for filing) is considered filed on the due date.\

---

I apologize; you are correct. I found the Reg. [Treas. Reg.  §301.6501(b)-1(a)]

[dmertz]

With regard to finding the filing date used to determine the statute of limitations period, the Account Transcript or Record of Account transcript of the taxpayer will show this date on the line labeled "RETURN DUE DATE OR RETURN RECEIVED DATE (WHICHEVER IS LATER)."  (Presumably the line is labeled this way to avoid taxpayers questioning an April 15 date being shown when they actually submitted their tax return earlier.)  The transcript also has an entry labeled "Tax return filed," but the date on that line just represents the date that the entry was made to the transcript, not the filed date, and can be considerably later than the filed date.

Another complicating factor is that the IRS allows an unadvertised grace period with respect to the regular due date of tax returns, so it's possible that a tax return filed shortly after the regular due date will be marked as having been filed on the regular due date.  For example, I filed my 2018 tax return under extension on April 20 yet my Account Transcript shows a filing date of April 15.

[TechAmateur]

Thank you for the comments. In this case the return, with extension, was filed on the due date, October 15, 2016.  I do like to proceed with caution on these things.

[fauxfernie]

The tax payer filed for an extension on their 2018 taxes. He paid an estimated tax amount, using prior years as his history. This extension needed to be completed in Oct of 2019 but he got ill, needing surgeries and hospitalization and in the end, he passed in Aug. of 2019. As his spouse, I have gathered his files and am ready to file those delinquent taxes, but I'm scared. I think I have all the information. but what if it's wrong. I am working toward getting a home equity loan and in the 12th hour, the underwriter wants to see the 2018 taxes, so 'I'm preparing them myself since I don't have an appointment with our tax preparrer . Is there a way I can contact the IRS and alert them to the fact that I will have them professionally done by the end of the month?

[Critter]

The IRS has nothing to do with the mortgage people ... they will accept the late return whenever you file it.  Your issue, if you are filing a joint return with the decedent, is with the loan officer.  If you need an accepted copy asap then take 2 copies of the return to a local IRS office ... they will accept one for processing and stamp the other copy with the date ... see if the loan officer will accept this.