Gift tax return extensions.

• Author: DeGregori, John H.

The instructions for Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, set forth two methods of extending the time to file these returns:

* By letter to the district director or service center with an explanation for the reason the extension is necessary; or

* An extension of time to file a Federal income tax return also will extend the time to file a gift tax return by checking a box on the appropriate extension form.

The November 1993 revision of these instructions states that "you MUST use a letter to request an extension of time to file your gift tax return unless you are also requesting an extension to file your income tax return." This statement was not contained in the instructions' previous version (Nov. 1991).

For several pre-1993 years, Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, was used to obtain extensions for gift tax returns even though the donor's income tax return was not extended. On Form 4868, the boxes were checked at line 7 and the following statement was written on the form: "EXTENSION FOR GIFT TAX ONLY - FORM 1040 HAS BEEN FILED AS OF 4/15/XX." Lines 1 through 6 were left blank.

For 1992 returns, IRS Service Centers began denying the extensions and informed the donors that, to obtain an extension of time to file only Form 709, they must submit a written request along with a full explanation of why the extension was needed.

The following question was submitted for the annual liaison meeting held Dec. 15, 1993 between IRS Western Region representatives, including California district directors, and the California CPA Society's Committee on Taxation:

Is this a change in IRS policy? Why is an explanation of the reason for the extension necessary when it is not required if the extension is requested concurrently with an extension for...