Weekly Q&A

Q:   My father, who was a Canadian citizen and resident, passed away personally owning a US real property and shares in US publicly traded companies all of which were bequeathed to me.  The US title company advised that I need to get a closing letter from the IRS before they switch the title of the real property to my name.  How can I obtain a tax ID for my father’s US non-resident estate tax return when I file one.

A:   Since the estate return relates to a deceased individual (not entity), it is not eligible for a US Employer Identification number (“EIN”), the US tax ID which is still relatively easy to obtain.  Further, since the estate return is not an income tax return, you won’t be able to obtain an Individual Taxpayer Identification number (“ITIN”) either.  You will have to complete a Form 706-NA and type “Applied For” in the identification box.  IRS examiners will assign a temporary nine-digit number with the letter “W” at the end to keep track of your US estate tax compliance.  This number will also appear in the Estate Tax Closing Letter issued as a confirmation that the estate has met its US tax compliance and tax cost obligations.  If the paperwork is properly executed, the whole process of obtaining the letter will take 6 to 8 months.  Ensure that within 30 days after filing a 706-NA, you also file the new Form 8971.  This is a brand new filing requirement which took effect on June 30, 2016 for deaths occurring after July 31, 2015.  Considering that a 8971 is not eligible for an ITIN either, you may need to provide an attachment referencing to IRC 6109 and Treas. Reg. 301.6109-1(b)(2)(iv) as a reason for a missing US tax ID.

Starting this month we will be issuing a weekly Q&A notes by bringing to your attention the most interesting (common? but not too boring) in our opinion question raised during the previous week.  If you have a burning question, please send it to us via email and perhaps it will make it the next week’s list.