Accessibility Skip to Top Navigation Skip to Main Content Home  |  Change Text Size  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 5. Collecting Process

Chapter 5. Insolvencies, Decedents Estates and Estate Taxes

Section 3. Working Decedent Cases

5.5.3  Working Decedent Cases

5.5.3.1  (06-23-2005)
Decedents Estates Section Overview

  1. This section outlines actions specific to tax accounts that accrue before the death of a taxpayer and remain unpaid after death. The accounts remain on file under the deceased taxpayer’s Taxpayer Identification Number (TIN) and are collected from the taxpayer’s surviving assets as defined by state property law.

  2. In this section, Field Collection decedent activities are organized in the order that collection processing most commonly occurs.

    1. Compliance Services Collection Operation (CSCO)

    2. Automated Collection System (ACS)

    3. Field Collections

    4. Technical Services Advisory (Advisory)

5.5.3.1.1  (06-23-2005)
General Information on Decedent Estates

  1. State law normally dictates which courts administer estates or probate wills. It is generally the place of residence when the taxpayer died, however, more then one probate proceeding may be opened if the taxpayer owned property in more than one state.

  2. Specific details of state probate procedures vary widely and must be followed explicitly before a will is probated.

  3. The following are actions commonly taken in probate proceedings. They cannot be generalized to apply in all circumstances. The existence of a will is the factor that most often influences a proceeding. The primary effect of a will is that it specifically names the party who will administer the estate and spells out how the estate property will be distributed after administration is complete.

  4. When there is a will filed with the court by the executor, after its authenticity is declared the executor is authorized to:

    1. gather the assets,

    2. pay the just debts of the deceased, and

    3. make distribution to the heirs as specified by the will.

  5. When there is no will, a court petition is filed requesting the appointment of an administrator. The court appoints an administrator and issues letters of administration authorizing the administrator to:

    1. gather the assets,

    2. pay the just debts of the deceased, and

    3. make distribution to the beneficiaries as dictated by state law or ordered by the court.

5.5.3.2  (06-23-2005)
Fiduciary Authority

  1. The fiduciary (executor or administrator) must post a bond before he/she is authorized to act for the estate unless the will provides that they may act without one.

  2. After gathering assets and determining debts due by the estate, the fiduciary

    1. prepares an inventory of estate assets,

    2. approves or disapproves creditor claims, (A creditor may argue their claim before the probate court. If adverse decision is rendered there, they may appeal to a higher court) and

    3. distributes to the beneficiaries any assets that remain after payment of creditors and expenses.

5.5.3.3  (06-23-2005)
Personal, Telephone, or Correspondence Contacts

  1. When an Internal Revenue Service employee receives a report of the death of an Individual Master File (IMF) taxpayer or a Business Master File (BMF) Sole Proprietor, the employee should gather the following facts:

    1. Date of death

    2. Place of death (including county)

    3. Taxpayer’s home address (including county) on the date of death

    4. Tax returns that may be due

    5. If an estate (probate) is involved, determine the court where it was filed, the docket number of proceedings, and the name, telephone number, and address of the administrator or executor.

  2. Advisory is responsible for the technical aspects of processing decedent and insolvent taxpayer cases.

    1. Refer questions or unresolved issues through the appropriate functional channels to Advisory in the area where the deceased or insolvent taxpayer lived.

    2. When possible, have set procedures for dealing with such cases based on specific criteria from Advisory in each area served by your function.

5.5.3.3.1  (06-23-2005)
Decedent Taxpayer Guidelines

  1. Remember the following collecting guidelines when working an IMF liability that involves a deceased taxpayer.

    If it is a joint liability and Then
    the secondary taxpayer is
    deceased     		pursue collection from the primary
    taxpayer
    the primary taxpayer is deceased pursue collection from the
    secondary taxpayer
    both taxpayers are deceased follow the guidelines for a single
    deceased taxpayer

  2. Remember the following collecting guidelines when working a BMF liability that involves a deceased taxpayer.

    If it is a partnership liability and: Then
    all partners are deceased follow the guidelines for a single
    deceased taxpayer
    there are one or more surviving
    partners     		pursue collection from surviving
    partners

5.5.3.4  (06-23-2005)
Compliance Services Collection Operations (CSCO) Procedures

  1. CSCO employees encounter reports of deceased taxpayers when

    1. reviewing outgoing notices,

    2. processing responses to Service correspondence,

    3. processing taxpayer initiated correspondence, and

    4. screening incoming mail from various courts and other agencies.

5.5.3.4.1  (06-23-2005)
Special Notice Output Review Actions

  1. CSCO is responsible for reviewing outgoing Computer Paragraph (CP) 515/615 and other delinquency notices to ensure quality and accuracy. One of the categories of notices that require special handling are those for deceased taxpayers.

  2. For MFT 30 delinquent return cases showing a deceased primary taxpayer, mail the notice as printed to receive information from relatives or other third parties.

5.5.3.4.1.1  (06-23-2005)
Delinquency Notice Response Actions

  1. If the primary SSN is that of a deceased spouse, and an original return is received

    1. Input TC 599 CC 94 (CSCO) or TC 599 CC 44 (ACS) if it is a taxable return for a year prior to the year of death

    2. Input TC 599 CC 96 (CSCO) or TC 599 CC 46 (ACS) if it is a Non-taxable return for a year prior to the year of death

    3. Input TC 591 CC 75 (CSCO) or TC 591 CC 25 (ACS),

    4. Input TC 540 to decedent’s SSN for the year of death,

    5. Also input TC 540 and TC 591 CC 75 or CC 25 on the year following the taxpayer’s death, or

    6. If the return is joint, and the deceased is the primary taxpayer update the entity by entering "Decd" after the first name of the deceased taxpayer and the surviving spouse as the second name line.

  2. If the primary SSN is that of a deceased spouse, and return was previously filed

    1. Input TC 591 CC 75 (CSCO) or TC 591 CC 25 (ACS)

    2. To generate the systemic closing letter, input the correspondence received date after the TC/CC

    3. Input TC 540 to decedent’s SSN for the same period as the TC 591

    4. Input TC 594 CC 84 (CSCO) or TC 594 CC 34 (ACS) to the spouse’s SSN

  3. If a response reporting a deceased taxpayer is received

    1. Input TC 591 CC 75 (CSCO) or TC 591 CC 25 (ACS)

    2. Input TC 540 to decedent’s SSN for the year of death

    3. Also input TC 540 and TC 591 CC 75 or CC 25 on the year following the taxpayer’s death

    4. If the return is joint, and the deceased is the primary taxpayer

    5. Update the entity as follows by entering " Decd" after the first name of the deceased taxpayer and the surviving souse as the second name line.

  4. Send Return Delinquency Responses for Deceased Business Master File (BMF) taxpayers to the Automated Collection System (ACS).

5.5.3.4.1.1.1  (06-23-2005)
Balance Due Notice Responses

  1. If the response indicates a deceased IMF taxpayer, take the following actions. Use Req 77 to input TC 540 on the TXMOD for the year the taxpayer died. If the year of death is unknown, input TC 540 on the current year

  2. Input entity changes to ENMOD as follows

    1. Joint taxpayers   Filing Status (FS) 2 as follows:
      John Decd & Mary Smyth
      c/o Mary Smyth

    2. Individual taxpayers (FS1), (FS3), (FS4) as follows:
      Estate of John Smythe (if an estate with an administrator exists)
      or John Smythe Decd (if no estate can be determined)
      Input an in-care-of (c/o) on the second name line if a
      representative responds as a contact point for the deceased

    3. For Business Master File (BMF) taxpayers change ENMOD as follows:

    Partnership Follow instructions for Joint IMF above
    Sole proprietorship Follow instructions for individual IMF above

5.5.3.5  (06-23-2005)
Automated Collection System (ACS) Actions

  1. Call the administrator or executor.

    1. Ask them to send a copy of the death certificate to the call site.

    2. Verify if there is an estate and the type of assets involved. If there is an open probate, obtain the probate docket number from the administrator or executor, or directly from the Probate Court

    3. Determine the location and value of the assets. If at the time of death the decedent owned real property secured by a Notice of Federal Tax Lien, see IRM 5.5.3.5(2)(4).

    4. Secure a promise to pay or to file, as appropriate.

    5. Document the comments section.

    6. Once the probate docket number is obtained, a decedent referral will be sent to the local Technical Services Advisory group for a Proof of Claim determination, regardless of the dollar amount.

  2. If unable to contact the administrator or executor,

    1. Document the comments

    2. Press the busy or no answer key

  3. After four unsuccessful attempts to contact the administrator, enter TOR4,,DECD.

  4. If at the time of death the decedent owned real property secured by a Notice of Federal Tax Lien, follow existing procedures for updating the collection status to 26 for assignment to a revenue officer field group.

  5. Regardless of the dollar amount, when it is determined that there is no estate and no real property as mentioned in number 4 above, process the account as currently not collectible (NC08).

5.5.3.5.1  (06-23-2005)
R4 Actions

  1. Enter AJEC,,540 to remove filing requirements

  2. Review Comments to ensure all relevant information is included

  3. When local guidelines permit, close NC08

  4. If not, contact Technical Services Advisory for specific guidance, and

    If Advisory advises that the account be Then
    transferred to a Revenue Officer Enter history code TFRO followed by the appropriate BAL DUE/DEL RET assignment code
    transferred to Advisory Enter history code TFTS followed by the BAL DUE/DEL RET assignment code they specify
    reported currently not collectible by ACS document this in comments and enter history code TORO with the literal NC08

    Note:

    Advisory will determine if a lien should be filed

5.5.3.6  (06-23-2005)
Field Collection Actions

  1. Field Collection decedent assignments originate when

    1. Revenue Officer learns that an assigned taxpayer is deceased while working the case,

    2. Decedent condition is part of a new field issuance, or

    3. Advisory issues an Other Investigation for field actions related to a decedent case under their control

  2. First, determine the following:

    1. Date of death

    2. Place of death (including county)

    3. Taxpayer’s home address (including county) on the date of death

    4. Tax returns that may be due

    5. Whether a probate proceeding was or is opened. If so, determine the court where filed, docket number of proceedings and name, telephone number, and address of the administrator (either an executor or a personal representative).

  3. After you have verified a probate through public records

    1. Determine from the court if it is listed as an "Asset" or "No Asset" Estate, and where local law allows for informal or unsupervised probate proceedings, determine if the probate has been so designated.

    2. Determine type of assets and their respective values

    3. Contact Advisory for guidance to determine if the case should be controlled by Advisory for proof of claim (POC) filing, or if payment should be solicited directly from the executor. Generally, the case will be controlled by the Revenue Officer if under local law the assets of the estate are subject to administrative enforcement action because the probate proceedings have been designated as informal or unsupervised. (See IRM 5.5.4 for information on POC filing).

  4. If there is no record of a probate proceeding, there are probably no assets of any value, or assets were transferred prior to death or directly to beneficiaries upon death. If asset checks reveal the taxpayer owned no distrainable assets and no transferee issues are present, close the case as currently not collectible, TC 530 CC08.

  5. If there is an open probate proceeding

    1. Contact the executor and solicit payment and any unfiled tax returns

    2. Advise the executor of possible liability under 31 U.S.C. § 3713

    3. Determine what, if any, assets exist, and whether the estate is solvent or insolvent. If the executor advises that all or part of the taxes can be paid, follow-up accordingly. Consult with Advisory and/or Area Counsel before taking any enforcement action

    4. If the assessed liability is over $10,000, check public records to confirm reported assets or to find possible unreported ones

    5. If no assets are found and it appears that no payment from the fiduciary is probable, close the case as currently not collectible TC 530 CC08 after considering possible fiduciary or transferee liabilities

    6. Review IRM 5.17.13 of the Legal Reference Guide for Revenue Officers for further information regarding decedents estates.

5.5.3.7  (06-23-2005)
Technical Services Advisory Coordination

  1. Coordinate technical and legal aspects of Compliance decedent case processing in Technical Services Advisory.

  2. Establish procedures and maintain controls on the Integrated Collection System (ICS) to ensure maximum collection and protection of Service interests.

  3. Court interpretation of Federal Estate law varies and state laws differ. To compensate for these differences, consult with Area Counsel to modify procedures when needed to provide consistency with local jurisdictional requirements.

  4. When a decedent situation is identified:

    1. Ascertain if the Service is owed money or tax returns.

    2. Determine if there is a court proceeding or another avenue for collection.

    3. Take the appropriate action to effect collection such as filing a proof of claim, requesting payment from the fiduciary, or levy on decedent assets.

    4. Consider an Other Investigation to the Field to secure delinquent returns, if indicated.

  5. Detailed proof of claim procedures for decedent cases are covered in Section 4 of this handbook.

5.5.3.7.1  (06-23-2005)
Closing Decedent Case Files

  1. Upon receipt of a notice of termination of a proceeding or upon Service verification that a proceeding concluded, Advisory should take the following actions:

    1. In all cases where a proof of claim was filed, notate the ICS history on to show the court proceeding has concluded.

    2. Review the case to determine if any remaining unpaid balances should be assigned for collection from exempt assets. When possible, initiate a levy directly from Advisory or send the remaining accounts to the Field for collection action.

    3. If the proceeding is closed and distribution was made without proper consideration of the Service’s claim, consult with Counsel to determine if action under 31 U.S.C. § 3713 is warranted.

    4. Notify Counsel that the case is closed, if it was referred to them previously.

    5. If no further collection potential exists, close case as currently not collectible, TC 530 CC 08.

    6. Reverse any litigation case controls by input of TC 521.

    7. Close out ICS case controls.

5.5.3.7.1.1  (06-23-2005)
Closing as Currently Not Collectible

  1. Use Closing Code (CC) 08 when reporting a decedent account currently not collectible.

  2. Perform a public records search in the country of last residence on all accounts with a total assessed liability over $10,000.

  3. Decedent cases do not require a Collection Information Statement (CIS).

5.5.3.7.1.1.1  (06-23-2005)
Technical Services Advisory Decedent Files Maintenance

  1. Advisory will initiate action to update and maintain Decedent case ICS controls.

  2. Periodically review open Decedent inventories and follow-up with the court to determine the status of the proceedings. Research automated systems that provide Service access to court records, personal research of court records, or through correspondence with the court.

  3. If distribution has not been made, note the reason for delay and the anticipated distribution date. Set a follow up for 45 days after the projected distribution.

  4. If the proceeding is closed and distribution was made without proper consideration of the Service claim, consult with Counsel to determine if action under 31 U.S.C. § 3713 is recommended.

  5. When action under 31 U.S.C. § 3713 is not recommended, the Service claim was properly considered, or there was no distribution; close the Decedent file.


More Internal Revenue Manual