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Project 02033

Estate Gift Tax Forms and Instructions Update

Project Statement:

Form 706-Estate Gift Tax forms, related schedules and Instructions are not clear enough for the average tax filer to understand. After careful preview of these forms, instructions, and schedules, it has been deemed that these forms could be written in clearer language so that taxpayers could understand what they are reading/filing.

Goal Statement:

The goal of this project is to review and make recommendations to the IRS that will reduce taxpayer frustration and confusion, thereby enhancing taxpayer compliance and/or giving taxpayers a more concise and efficient way to dispute incorrect IRS information. Special Projects looked at 706 Form and Instructions to provide clarity in terminology. This will be beneficial to individuals who will actively fill out this form. A review of the forms and instructions will not only provide clarity but also ensure consistency in ensuring there is a glossary to define/explain the terms in layperson’s language. Ensure that Form 706 – US Estate Gift and Generation Skipping Transfer Tax return is clear and easily understandable

Special Projects Committee

Opened: 2024


Status: Closed

RECOMMENDATION 02033-001

RECOMMENDATION TEXT:

Ensure that forms are Free File Fillable forms: 706, 706 GS(D), 706-GS(D-1), 706-GS(T), 706-NA, 706-QDT, Form 706 Schedule R-1 Form 709
E File

Justification: The taxpayer will have a quality service for cumbersome forms and this recommendation will all minimize the paper usage of all

IRS Action: Not adopted

The IRS e-File Services (eFS) is developing the build-to requirements for the Forms 706/709 series release. eFS divided the delivery of the updated Forms 706/709 into two different processing years, then prioritized the forms for delivery. Form 706 has a planned delivery for TY2024/PY2025. and 709 TY2025/PY2026.
However, there are no plans to have a direct filing method for Forms 706 & 709 and associated forms.

RECOMMENDATION 02033-002

RECOMMENDATION TEXT:

Where appropriate, add a glossary for definitions of the identified terms in all form instructions.

Justification: Some forms have instructions attached separate from the form. No matter how the form instructions are made available, we recommend a glossary to be included with all forms for the specified words and language. This goes to the TBOR Right to be Informed.

IRS Action: Not adopted

The Instructions for Form 706 has an extensive Index with electronic links to page(s). Taxpayers can also be advised to refer to additional IRS sources such as Publication 559.

RECOMMENDATION 02033-003

RECOMMENDATION TEXT:

Form 706 & Instructions: Page 1 question 3B Replace with Year Place of residence established.
Justification: Simpler language

IRS Action: Not adopted

Domicile is a legal term of art that is significant for estate tax purposes. The Instructions and IRM provide clarification.

RECOMMENDATION 02033-004

RECOMMENDATION TEXT:

Form 706- Page 1 question 8 If decedent died Estate Replace with – If Decedent died with a will in place
Justification: Simpler language

IRS Action: Not adopted

Estate is a legal term dependent on state law at the time of the decedent’s death. Page 3 of the instructions includes an explanation.

RECOMMENDATION 02033-005

RECOMMENDATION TEXT:

Form 706- Page 1, question 11 (corrected question number)
Ref to Section 20.2010-2a(7)(ii)
Make this a hyperlink or pop out to reference this section
Justification: Ease of use of completing the form

IRS Action: Not adopted

A hyperlink would have to be monitored for functionality. Rather than include links, instructions can provide that the Internal Revenue Code (Title 26) can be accessed at uscode.house.gov, and the Federal regulations can be accessed at www.eCFR.gov.
With respect to this specific question (page 1, question 11), the instructions provide a detailed explanation.

RECOMMENDATION 02033-006

RECOMMENDATION TEXT:

Form 706- Page 1 questions 1 & 2/ Ref part 5 Recapitulation/ Reference to restate from Part 5 line item 13 & 24 respectively
Justification: Simpler language and later section references

IRS Action: Not adopted

“Part 5 – Recapitulation” is the specific title for the section on page 3, which defines the enumerated items as “item no.,” not line; the current terminology provides a guide to specific items under the recapitulation.

RECOMMENDATION 02033-007

RECOMMENDATION TEXT:

Form 706- Page 1 question 9b Deceased Spousal unused exclusion (DSUE)Define this via a pop out (tab to hit for more information) and in the instructions.
Justification: Simpler within the same section

IRS Action: Not adopted

The reference within the body of the form is adequate. Part 6 is titled “Portability of Deceased Spousal Unused Exclusion (DSUE).”

RECOMMENDATION 02033-008

RECOMMENDATION TEXT:

Form 706 Add a glossary in line with each section and at the end of the instructions Make it page 5 or page 56

IRS Action: Not adopted

The Form 706 instructions include an index. We will consider adding items that would be included in a glossary to the index and defining in the text of the instructions.

RECOMMENDATION 02033-009

RECOMMENDATION TEXT:

Form 706- Page 1, question 13 Attach form 706 CE Add a popout to the designated form and or the instructions

IRS Action: Not adopted

See ID#5

RECOMMENDATION 02033-010

RECOMMENDATION TEXT:

Form 706- Page 1, question 14 Attach form Schedule P and Q Add a popout to the designated form and or instructions

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-011

RECOMMENDATION TEXT:

Form 706- Pages 2, Part 3, question 3 References to section 6166 Add a popout to the designated form and or instructions
Justification: Ensure this is noted throughout the document

IRS Action: Not adopted

See ID #5

RECOMMENDATION 02033-012

RECOMMENDATION TEXT:

Form 706- Pages 2 part 4 CAF Number define what is the CAF number
Justification: Nine-digit number per the IRS for POA, complete form 2848 or 8821

IRS Action: Recommended

Under Consideration
Efforts are underway to redesign this portion of the form, which may impact the entry space for CAF numbers.

RECOMMENDATION 02033-013

RECOMMENDATION TEXT:

Form 706- Pages 2 part 4, question 5 Schedule O Add a popout to the designated form and or instructions

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-014

RECOMMENDATION TEXT:

Form 706- Page 4 Part 6 QDOT, DSUE Define QDOT, DSUE with popout

IRS Action: Not adopted

See ID #7 regarding the QDOT definition and instructions

RECOMMENDATION 02033-015

RECOMMENDATION TEXT:

Form 706 Several areas have open white space Replace with Table format for ease of use in paper and digital format

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-016

RECOMMENDATION TEXT:

Form 706 Page 23 QTIP Define QTIP and add popout

IRS Action: Not adopted

See ID #5 regarding popout/hyperlink. The instructions provide a definition for QTIP.

RECOMMENDATION 02033-017

RECOMMENDATION TEXT:

Form 706 GS(D) Page 23 Paper filing form only Make the form a Free File Fillable Form E file
Justification: Minimize paper

IRS Action: Not adopted

See ID #1.

RECOMMENDATION 02033-018

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 No original text Ensure new mailing address is highlighted on this form: Addresses for mailing certain forms have changed since the forms were last published Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999 Mailing address for Forms 267.

IRS Action: Adopted

The GS D and D-1 instructions provide the (where to) filing information. The D instructions indicate KC (after 6/30/19). D-1 indicates Florence. Updates should be made as needed.

RECOMMENDATION 02033-019

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 No glossary exists Ensure a glossary is in the instructions

IRS Action: Not adopted

We believe the instructions are adequate.

RECOMMENDATION 02033-020

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 Attached 706 GS (D-1) Provide popout and free fill fillable form.
Justification: Streamline filing taxes and minimizing paper.

IRS Action: Not adopted

The D-1 is a separate (information) return prepared by a different party (trustee), so it is not a fillable form option. A copy should be attached by the taxpayer.

RECOMMENDATION 02033-021

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 question 1a Skip person distribute Replace with done or Transfer Recipient.
Justification: Add clarity and simplicity to the language.

IRS Action: Not adopted

“Skip person” is defined under IRC 2631(a).

RECOMMENDATION 02033-022

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 < part III, question 8 Payment, if any with Form 7004 Reference this form with a popout and ensure that it is FFFF.

IRS Action: Not adopted

Form 7004 would have already been filled out and submitted prior to filing Form 706 GS(D).

RECOMMENDATION 02033-023

RECOMMENDATION TEXT:

Form 706 – GS(D-1) Paper filing form only Make the form a Free File Fillable Form E file.
Justification: Minimize paper

IRS Action: Not adopted

See ID #1.

RECOMMENDATION 02033-024

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 No glossary Ensure a glossary is in the instructions.

IRS Action: Not adopted

We believe that the instructions are adequate. A glossary is not necessary.

RECOMMENDATION 02033-025

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 Copy A: Send to the IRS Provide address within document for clarity – it is in instructions Streamline filing taxes and minimizing paper.

IRS Action: Adopted

The GS D and D-1 instructions provide the (where to) filing information. D instructions indicate KC (after 6/30/19). D-1 indicates Florence. Updates should be made as needed.

RECOMMENDATION 02033-026

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1, Part II White space for adding content Provide a table format for entries for ease of use in paper or digital format.

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-027

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 Part III, question 4 Explicit trust Define explicit trust as the instructions define a non-explicit trust. Do not assume the taxpayer will derive the difference.

IRS Action: Adopted

Cite to Reg. section 301.7701-4(a) where trust is defined.

RECOMMENDATION 02033-028

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 1 Part III, question 7 Allocation Rules The form references this but the instructions do not. Unsure what allocation rules to adhere to for the taxpayer or executor.

IRS Action: Adopted

Deemed allocation rules are under IRC 2632 – consider adding reference: deemed allocation rules of section 2632.

RECOMMENDATION 02033-029

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 2
Copy B for Distribute
Copy for the person receiving the funds et al

IRS Action: Not adopted

This is prepared and sent by the trustee who understands the terminology.

RECOMMENDATION 02033-030

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 2, Part II
White space for adding content
Provide a table format for entries for ease of use in paper or digital format

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-031

RECOMMENDATION TEXT:

Form 706 GS(D)- Page 3
No glossary exits
High level instructions but no definitions

IRS Action: Not adopted

We believe that the instructions are adequate.

RECOMMENDATION 02033-032

RECOMMENDATION TEXT:

Form 706 – GS(T)
Paper filing form only
Make the form a Free File Fillable Form
E file
Justification: Minimize paper

IRS Action: Not adopted

See ID#1.

RECOMMENDATION 02033-033

RECOMMENDATION TEXT:

Form 706 – GS(T) Mailing Address
No original data
Requires to mail to new address: Addresses for mailing certain forms have changed since the forms were last published Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999 Mailing address for Forms 267

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-034

RECOMMENDATION TEXT:

Page 1, part II, question 3
Ref. Section 2632
Add Popout and reference to the form

IRS Action: Not adopted

Section 2632 is a statute, not a form.

RECOMMENDATION 02033-035

RECOMMENDATION TEXT:

Page 1, part II, question 5
Ref section 2611(b)(1)
Add Popout and reference to the form

IRS Action: Not adopted

Sections 2611(b)(1) and (2) are statutory references (also explained in text of form).

RECOMMENDATION 02033-036

RECOMMENDATION TEXT:

Page 1, part II, question 7
QTIP sec 2662(a)(3)
Define QTIP and popout to the section
Justification: Qualified Terminable Interest Property – provide for a spouse

IRS Action: Partially adopted

Will spell out QTIP, but will not add a popout. See ID# 5

RECOMMENDATION 02033-037

RECOMMENDATION TEXT:

Page 1, part III
Refence to Form 7004 etc
Add Popout and reference to the form

IRS Action: Not adopted

See ID# 5

RECOMMENDATION 02033-038

RECOMMENDATION TEXT:

Page 3 Schedule B1
Ref to section 2622(b)
Add Popout and reference to the form

IRS Action: Not adopted

See ID# 5.

RECOMMENDATION 02033-039

RECOMMENDATION TEXT:

Form 706 NA
Paper filing form only
Make this form a Free File Fillable Form
E file
Justification: Minimize Paper use

IRS Action: Not adopted

See ID# 1.

RECOMMENDATION 02033-040

RECOMMENDATION TEXT:

Mailing Address
No original text
Requires to mail to new address: Addresses for mailing certain forms have changed since the forms were last published Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999 Mailing address for Forms 267

IRS Action: Not adopted

Up-to-date mailing addresses are provided in the instructions.

RECOMMENDATION 02033-041

RECOMMENDATION TEXT:

Page 1, part II
Ref. Schedule Q, R, and form 706
Add Popout and reference to the forms

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-042

RECOMMENDATION TEXT:

Page 2, part 3
Ref section 601.504.(b)(2)
Add Popout and reference to the form

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-043

RECOMMENDATION TEXT:

Page 2, part 3
Ref several schedules, G, H etc.
Add Popout and reference to the form

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-044

RECOMMENDATION TEXT:

Form 706-QDT
Paper filing form only
Make the form a Free File Fillable Form
E file
Justification: Minimize Paper use

IRS Action: Not adopted

See ID #1.

RECOMMENDATION 02033-045

RECOMMENDATION TEXT:

Form 706-QDT Mailing Address
No original text
Requires to mail to new address: Addresses for mailing certain forms have changed since the forms were last published Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999 Mailing address for Forms 267

IRS Action: Not adopted

Up-to-date mailing addresses are provided in the instructions.

RECOMMENDATION 02033-046

RECOMMENDATION TEXT:

Form 706-QDT Page 1, Part I, question 3b
TIN of surviving spouse
Replace with ITIN/SSN of surviving spouse
Justification: Simple language

IRS Action: Not adopted

The instructions explain that the surviving spouse’s TIN is their SSN or ITIN – This would need to be updated if the reference to TIN is removed from Form 706-QDT.

RECOMMENDATION 02033-047

RECOMMENDATION TEXT:

Form 706-QDT Page 1 part II
Referent to several forms and sections
Add popout reference in FFFF

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-048

RECOMMENDATION TEXT:

Form 706-QDT Page 1 Part III, ques 14
exceeds
Replace with greater than

IRS Action: Not adopted

This suggestion will make the sentence longer, not necessarily clearer.

RECOMMENDATION 02033-049

RECOMMENDATION TEXT:

Form 706-QDT Page 2 Schedule A
designated filer
Replace with approved preparer
See Page 3 Sch B Part 1

IRS Action: Not adopted

The form and instructions consistently refer to “designated filer,” which is a technical term of art contained in reg. sec. 20.2056A-9.

RECOMMENDATION 02033-050

RECOMMENDATION TEXT:

706 Schedule R
Paper filing form only
Make the form a Free File Fillable Form
E file
Justification: Minimize paper

IRS Action: Not adopted

See ID #1.

RECOMMENDATION 02033-051

RECOMMENDATION TEXT:

706 Schedule R Page 1
Service Center where 706 was filed
IRS mailing/filing location for 706

IRS Action: Adopted

Assuming this ID meant to refer to the Schedule R-1 and is asking us to update the addresses in the schedule then we will adopt it.

RECOMMENDATION 02033-052

RECOMMENDATION TEXT:

Form 706 Schedule R Page 1 part I
white space
Table format for ease of use in paper and digital format

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-053

RECOMMENDATION TEXT:

Form 706 Schedule R-1
Fiduciary
Consider replacing with trustee or broker

IRS Action: Not adopted

Fiduciary is the correct legal term.

RECOMMENDATION 02033-054

RECOMMENDATION TEXT:

Form 706 Schedule R Page 2 Instructions introduction
File one copy and keep one for records
Bold this statement

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-055

RECOMMENDATION TEXT:

Form 706 Schedule R Page 2 How to pay
Correct grammar
You can pay by check, money order, or by electronic funds transfer

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-056

RECOMMENDATION TEXT:

Form 706 Schedule R Page 2 What to mail
Mail your check or money order, if applicable, and copy of the Schedule R-1 that you signed
Clarification on the documents to mail and where to mail them

IRS Action: Not adopted

We believe that the instructions are sufficiently clear

RECOMMENDATION 02033-057

RECOMMENDATION TEXT:

Form 706 Schedule R Page 2, Automatic extension
If you pay the GST tax under the automatic extension, you will be charged interest (no penalties)
Bold this statement

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-058

RECOMMENDATION TEXT:

Form 709
Paper filing form only
Make this form a Free Fillable File Form
E file
Justification: Minimize Paper use

IRS Action: Not adopted

See ID #1.

RECOMMENDATION 02033-059

RECOMMENDATION TEXT:

Form 709 Page 1 question 11 a
Ref 709 and 709A
Add popout to these forms

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-060

RECOMMENDATION TEXT:

Form 709 Page 1 ques 19
DSUE
Introduces DSUE acronym without spelling it out first – Designated Spouse Unused Exclusion
Update throughout Form 709

IRS Action: Adopted

Adopt

RECOMMENDATION 02033-061

RECOMMENDATION TEXT:

Form 709 page 1
Signature of donor
Replace with Signature of donor, executor, or trustee (if the donor is deceased)
Update throughout the document

IRS Action: Not adopted

The instructions provide an explanation.

RECOMMENDATION 02033-062

RECOMMENDATION TEXT:

Form 709 Page 2 schedule
ref 529 (C)(2)(B)
Add popout to these forms/sections

IRS Action: Not adopted

See ID #5.

RECOMMENDATION 02033-063

RECOMMENDATION TEXT:

Form 709 Page 2 Schedule A
CUSIP#
Define term Committee on Uniform Securities Identification Procedures

IRS Action: Not adopted

The instructions provide a definition.

RECOMMENDATION 02033-064

RECOMMENDATION TEXT:

Form 709 Page 3
QTIP
Spell out and add popout

IRS Action: Partially adopted

We will spell it out, but will not add a popout

RECOMMENDATION 02033-065

RECOMMENDATION TEXT:

Form 709 Page 5 part 2
Ref 2631 & 2652 (A)(3)
Add popout to these forms/sections

IRS Action: Not adopted

See ID #5.