What IRS Form 706 (2020) Is For

IRS Form 706 is the United States Estate (and Generation-Skipping Transfer) Tax Return used by executors to report the estate tax owed when someone dies (IRS Instructions for Form 706). You must file this form if the deceased person was a U.S. citizen or resident and their gross estate, plus adjusted taxable gifts and specific exemptions, exceeded $11,580,000 in 2020 (IRS.gov Estate Tax). The form is also used to make a portability election, which allows a surviving spouse to use any unused estate tax exemption from the deceased spouse.

When You'd Use Form 706 for 2020 (Late or Amended Filing)

You might be filing Form 706 for 2020 as a late or amended return in several situations. Common scenarios include:

• Receiving IRS notices about unfiled estate tax returns
  
  
• Missing the original 9-month filing deadline (plus any 6-month extension)
  
  
• Discovering the estate exceeded the filing threshold after initial calculations
  
  
• Needing to make a portability election that was missed during the original filing window
  
  

For refund claims, you generally have three years from the original due date or two years from payment to file. For amended returns correcting errors or claiming additional deductions, write “Supplemental Information” across the top of page 1 and attach copies of pages 1–4 from the original return.

Key Rules Specific to 2020

• Filing threshold: $11,580,000 exemption
  
  
• Unified credit: $4,577,800 credit amount against tax
  
  
• GST exemption: $11,580,000, but unlike estate exemption, GST exemption is non-transferable to surviving spouses
  
  
• Deadlines: 9 months after death, with possible 6-month extension via Form 4768
  
  
• COVID-19 relief: Certain deadline extensions and penalty relief applied in 2020 for estates impacted by pandemic-related delays
  
  

Step-by-Step (High Level)

• Gather estate transcripts and records: Obtain account transcripts from the IRS if any prior filings exist, collect all estate asset valuations as of the date of death, and gather supporting documentation for deductions and credits.
  
  
• Complete the correct-year form: Use the 2020 version of Form 706 and its instructions, not the current year version, as tax laws and forms change annually.
  
  
• Attach required schedules: Include all applicable schedules (A through U as needed), Form 8971 for basis reporting requirements, and any supporting documentation for claimed deductions or elections.
  
  
• File and payment options: Mail to the Kansas City, MO processing center unless using a private delivery service, or check if electronic filing is available for your situation (most Form 706 returns require paper filing).
  
  
• Keep copies: Maintain complete copies of all filed documents, as estate tax matters can remain open for several years and you may need to reference your filing.
  
  

Common Mistakes and How to Avoid Them

• Missing the portability election: Even if no estate tax is owed, you must file Form 706 by the deadline (including valid extensions) to elect portability for the surviving spouse—this election cannot be made on a late-filed return without special circumstances (IRS Instructions for Form 706).
  
  
• Incorrect asset valuations: Use professional appraisals for hard-to-value assets and ensure you're using the correct valuation date (date of death or alternate valuation date if elected).
  
  
• Incomplete Schedule A: List all U.S. assets in the gross estate with sufficient detail for IRS identification, including CUSIP numbers for securities and detailed property descriptions.
  
  
• Failing to file Form 8971: You must report basis information to beneficiaries within 30 days of filing Form 706 (or the due date if filed late).
  
  
• Missing required signatures: All named executors should sign, or if multiple executors exist, ensure at least one signs with proper authority documentation.
  
  
• Calculation errors in tax computation: Double-check all mathematical calculations, especially the unified credit computation and any applicable treaty benefits or special elections.
  
  

What Happens After You File

The IRS typically takes 6–9 months to process Form 706, though complex returns may take longer (IRS Publication 559). You'll receive notices if additional information is needed or if the IRS proposes changes during examination. If you owe additional tax, you can request a payment plan using Form 9465 (Installment Agreement Request), and interest charges apply from the original due date. The IRS generally has three years from the filing date to audit the return, though this period can be extended. If the IRS proposes changes you disagree with, you have appeal rights through the Office of Appeals. Instead of traditional closing letters, you can request account transcripts after six months to confirm case status.

FAQs

Can I still make a portability election on a late-filed 2020 Form 706?

Generally no—portability elections must be made on timely filed returns (including valid extensions). However, certain IRS relief procedures provide exceptions for late elections if specific requirements are met.

What penalties apply for late filing of Form 706?

The late filing penalty is 5% of the tax owed per month (or partial month), up to 25% maximum. Late payment penalties are 0.5% per month up to 25%. Both penalties can apply simultaneously, and interest accrues on unpaid tax and penalties from the original due date.

How do I get transcripts for an estate that never filed Form 706?

Use Form 4506-T to request estate tax transcripts, or authorized representatives can access them through the IRS Transcript Delivery System. If no return was filed, there may be no transcript, but the IRS can confirm non-filing status.

Is there a refund statute of limitations for overpaid estate tax?

Yes—you generally have three years from the return due date or two years from when you paid the tax to claim a refund, whichever is later.

Do I need to amend state estate tax returns if I amend Form 706?

Many states require amended state returns when federal returns are amended, but requirements vary by state. Check with your state tax authority, as some states have independent filing requirements and deadlines that differ from federal rules.

What if I discover errors after the audit statute of limitations expires?

After the three-year audit period closes, the IRS generally cannot propose additional tax, but you also cannot claim refunds for most errors. Certain circumstances may allow for extended deadlines or special relief procedures.

Can I e-file Form 706 for 2020?

Most Form 706 returns must be filed on paper and mailed to the Kansas City processing center. Electronic filing is limited and generally not available for most estate tax returns.

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