Instructions For Form 8971 And Schedule A - 2016 (Page 2 of 4) in pdf

Supplemental Forms 8971

executor of an estate or other person

a TIN, a beneficiary's surname, and the

required to file Form 8971 fails to file a

value of the asset the beneficiary is

and Schedules A

correct Form 8971 and/or Schedule A with

receiving from the estate.

The value of the property to be reported

the IRS by the due date and reasonable

on the initial Form 8971 and the attached

Note. A TIN is a Social Security Number

cause is not shown, a penalty may be

Schedules A is the fair market value of the

(SSN), an Employer Identification Number

imposed. The penalty applies if there is a

asset as reported on the estate tax return.

(EIN), an Individual Taxpayer Identification

failure to file timely, a failure to include all

However, the final value for purposes of

Number (ITIN), or any other number used

information required to be shown on the

the federal estate tax may differ from that

by the IRS in the administration of tax

form or schedule, a failure to include

reported on the estate tax return. A value

laws.

correct information on the form or

is considered “final” when:

schedule, or a failure to file a correct

Failure to furnish correct Schedules A

The value of the property shown on an

supplemental Form 8971 and/or

to beneficiaries by the due date (sec

estate tax return filed with the IRS is not

Schedule A by the due date. A complete

tion 6722). If the executor of an estate or

contested by the IRS before the period of

Form 8971 includes all Schedule(s) A.

other person required to file Form 8971

assessment expires;

Only one penalty will apply for all

fails to provide a correct Schedule A to a

The value of the property is specified by

failures relating to a single filing of a single

beneficiary and does not show reasonable

the IRS and is not timely contested by the

Form 8971 and the Schedule(s) A

cause, a penalty may be imposed. The

estate (or other person required to file

required to be filed along with it. Each

penalty applies if there is a failure to

under section 6018(b)); or

filing of a Form 8971 with Schedule(s) A is

provide the Schedule A by the due date, a

The value of the property is determined

a separate filing, regardless as to whether

failure to include all information required to

by a court or pursuant to a settlement

the filing is of the initial Form 8971 and

be shown on the schedule, a failure to

agreement with the IRS, including the

Schedule(s) A or a supplemental Form

include correct information on the

resolution of a claim for abatement or

8971 and Schedule(s) A.

schedule, or a failure to provide a correct

refund.

supplemental Schedule A by the due date.

The amount of the penalty depends on

The penalty applies for each Schedule A

when the correct Form 8971 with

If information reported on Form 8971

required to be provided.

Schedule(s) A is filed.

and the Schedule(s) A filed with the IRS or

The amount of the penalty depends on

provided to a beneficiary differs from the

The penalty is as follows.

when a correct Schedule A is provided.

final value (as the result of the resolution

$50 per Form 8971 (including all

of a valuation dispute or otherwise), the

Schedule(s) A) if it is filed within 30 days

The penalty is as follows.

executor or other person required to make

after the due date. The maximum penalty

$50 per Schedule A if it is provided

this filing must file a supplemental Form

is $532,000 per year (or $186,000 if the

within 30 days after the due date. The

8971 and affected Schedule(s) A with the

taxpayer qualifies for lower maximum

maximum penalty is $532,000 per year (or

IRS and provide an updated supplemental

penalties, as described below).

$186,000 if the taxpayer qualifies for lower

Schedule A to each affected beneficiary

$260 per Form 8971 (including all

maximum penalties, as described below).

no later than 30 days after the adjustment.

Schedule(s) A) if it is filed more than 30

$260 per Schedule A if it is provided

See Where To File, earlier. On both the

days after the due date or if it is not filed.

more than 30 days after the due date or if

supplemental Form 8971 and each

The maximum penalty is $3,193,000 per

it is not provided. The maximum penalty is

supplemental Schedule A, the

year ($1,064,000 if the taxpayer qualifies

$3,193,000 per year ($1,064,000 if the

“Supplemental Filing” box should be

for lower maximum penalties, as

taxpayer qualifies for lower maximum

checked and only the information that has

described below).

penalties, as described below).

changed should be reported.

All penalty amounts shown are subject

to adjustment for inflation.

If the executor or other person required

to file Form 8971 has been notified that a

Lower maximum penalties. You qualify

Form 706, Form 706-NA, or Form 706-A

for lower maximum penalties if your

related to the Form 8971 and Schedule(s)

average annual gross receipts for the 3

A has been selected for examination, a

most recent tax years (or for the period

copy of the supplemental Form 8971 with

you were in existence, if shorter) ending

attached supplemental Schedule(s) A

before the calendar year in which the

should be provided to the office

information returns were due are $5 million

conducting the examination.

or less.

Intentional disregard of filing require

Rounding Off to Whole

Intentional disregard of filing require

ments. If any failure to file a correct Form

ments. If any failure to provide a correct

Dollars

8971 or Schedule A is due to intentional

Schedule A is due to intentional disregard

disregard of the requirements to file a

of the requirements to provide correct

The value of property should be reported

correct Form 8971 and Schedule(s) A, the

in U.S. dollars and rounded to

Schedules A, the penalty is at least $530

minimum penalty is at least $530 per Form

whole-dollar amounts. To round, drop

per Schedule A with no maximum penalty.

8971 and the Schedule(s) A required to be

amounts under 50 cents and increase

Inconsequential error or omission. An

filed with it, with no maximum penalty.

amounts from 50 to 99 cents to the next

inconsequential error or omission is not

dollar. For example, $1.39 becomes $1

Inconsequential error or omission. An

considered a failure to include correct

and $2.55 becomes $3. If you add two or

inconsequential error or omission is not

information. An inconsequential error or

more amounts to figure an item's value,

considered a failure to include correct

omission cannot reasonably be expected

include the cents when adding the

information. An inconsequential error or

to prevent or hinder the beneficiary from

amounts and round off only the total.

omission does not prevent or hinder the

timely receiving correct information and

IRS from processing the Form 8971 and

using the information to report basis on the

Penalties

the Schedule(s) A required to be filed

beneficiary’s own return. Errors and

along with it. Errors and omissions that are

omissions that are never inconsequential

Failure to file correct Forms 8971 by

never inconsequential are those related to

are those related to (a) the value of the

the due date (section 6721). If the

Instructions For Form 8971 And Schedule A - 2016 Page 2

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