Instructions For Form Mn-706 - Minnesota Estate Tax (Page 3 of 6) in pdf

Who is responsible for

There is no separate form to extend the

5 Determine the number of days from

Minnesota return.

January 1 to date of payment.

paying?

(M.S. 289A.19, subd. 4)

6 Divide step 5 by 365. Round off the

The executor and each person who is

result to four places after the decimal

Paying tax in installments

receiving assets that are subject to

point.

federal estate tax and included on line 1

If the Minnesota estate tax is $5,000 or

7 Multiply step 6 by the interest rate in

of the estate’s Form 706 are responsible

more and the IRS has granted the estate

effect for that year.

for paying a portion of the total Minne-

an extension of time to pay the federal

sota estate tax equal to his or her share of

8 Multiply step 7 by the amount of tax

estate tax for the purpose of paying the

the value of the assets.

still due.

tax in installments, the estate may pay

(M.S. 289A.31, subd. 6)

9 Add step 4 and step 8. This is the

the Minnesota estate tax in installments

amount of interest to include with

if the requirements explained below are

Deadline for filing

your installment.

met.

You must file Form MN-706 no later

If you fail to make an installment on

To be allowed to pay the Minnesota

than nine months after the date of death

time, you cannot continue to pay the tax

estate tax in installments, the executor

of the decedent unless a federal extension

in installments. Instead, you must pay

must notify the commissioner in writing

of the filing deadline has been granted.

—within 90 days from the date of the

no later than nine months after the date

(M.S. 289A.18, subd. 3)

missed installment — the full amount of

of death of the decedent. The letter must

unpaid estate tax, a late payment penalty

indicate that the estate will pay the

Deadline for paying

on the unpaid tax, plus interest.

Minnesota estate tax in installments and

the dates the payments will be made.

The Minnesota estate tax must be paid

However, if you missed the installment

The dates must be the same as the dates

no later than nine months after the date

date for what you believe is a reasonable

on which the federal estate tax install-

of death of the decedent. However, it may

cause, write to the Commissioner of

ments will be made.

be possible to pay the tax in installments

Revenue explaining why the payment

after this date if the estate meets the

was late. You will be notified in writing

The installments on the total estate tax

requirements explained in the section

whether you may continue to pay

owed — not including interest owed —

Paying tax in installments on this page.

Minnesota estate tax in installments.

must be made in equal amounts.

(M.S. 289A.20, subd. 3)

(M.S. 289A.30, subd. 2)

Even if you pay the tax in installments,

Extension of time to file

you must pay interest on any tax that

Penalties

remains unpaid after nine months from

If the Internal Revenue Service (IRS)

Late payment. Unless the tax is being

the date of death of the decedent. The

grants an extension of time to file the

paid in installments, a late payment

rate of interest on each installment will

decedent’s federal estate tax return, the

penalty is assessed on any unpaid tax if

be the interest rate in effect during that

federal extended filing due date auto-

all or part of the estate tax is paid after

annual period.

matically applies to the Minnesota estate

the due date. The due date is nine

(M.S. 289A.55, subd. 7)

tax return. The extension of time to file

months after the decedent’s date of

The amount of interest to include with

does not extend the time in which you

death.

each installment must be figured sepa-

must pay the estate tax.

The penalty is 3 percent of the amount of

rately. Determine the interest for each

Extension payment. Estate tax is due by

tax not paid on time if you send it in

installment by following the steps below:

the regular due date, even if the return

within 30 days of the due date. The

1 Determine the number of days from

will be filed under an extension. A late

penalty increases by 3 percent per 30-day

the last payment due date (return or

payment penalty and interest will be

period (or part of a 30-day period) that

installment) to date of payment or

assessed on tax paid after the regular

your payment is late, up to 24 percent.

December 31, whichever is earlier.

due date, unless the IRS has granted an

Late filing. A late filing penalty is in

extension to pay tax, or you have

2 Divide step 1 by 365. Round off the

addition to any late payment penalty

properly elected under IRC section 6166

result to four places after the decimal

which may apply. The penalty for

to pay tax in installments. In which case,

point.

failing to file on time is 3 percent of the

a penalty will not be assessed.

3 Multiply step 2 by the interest rate in

amount of tax not paid on time if you

To avoid penalties and interest, you must

effect for that year.

send it in within 30 days of the due date.

pay your tax on or before the regular due

The penalty increases by 5 percent per

4 Multiply step 3 by the amount of tax

date. Be sure to attach a completed Form

30-day period (or part of a 30-day

still due.

PV86, Estate Tax Extension Payment, with

period) that your payment is late, up to

• If the due date is in the same year

your check.

23 percent.

that you are making your pay-

When you file Form MN-706, attach a

ment, stop here. The result in step

The maximum penalty for filing late and

copy of the IRS document that grants the

4 is the amount of interest you

paying late is 38 percent.

extension of time to file the federal

must include with your installment.

Failing to file with intent to evade the tax,

return. Also, be sure to indicate on the

• If your payment was due in one

or filing a false or fraudulent return. A

front of your Minnesota return the

year and you are making the

penalty of 50 percent of the tax due is

approved filing extension due date of the

installment in the next calendar

added to the tax. This penalty is in

federal return. If you made an extension

year, continue with step 5.

addition to penalties that may be applied

payment, include the amount you paid

on line 14 of Form MN-706.

continued on page 4

Instructions For Form Mn-706 - Minnesota Estate Tax Page 3

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