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grandchild’s children will be treated as

Note. A paid preparer may sign

Penalties and Interest

your grandchildren rather than your

original or amended returns by rubber

Section 6651 provides for penalties for

great-grandchildren.

stamp, mechanical device, or computer

both late filing and for late payment

software program.

This rule is also applied to your lineal

unless there is reasonable cause for

descendants below the level of

the delay. The law also provides

grandchild. For example, if your

penalties for willful attempts to evade

Specific Instructions

grandchild is deceased, your

payment of tax.

great-grandchildren who are lineal

Complete Form 706-GS(T) in the

The late filing penalty will not be

descendants of the deceased

following order: Parts I and II, Schedule

imposed if the taxpayer can show that

grandchild are considered your

A (through line 4), Schedule B,

the failure to file a timely return is due

grandchildren for purposes of the GST

Schedule A (lines 5 through 10),

to reasonable cause. Trustees filing late

tax.

Part III.

(after the due date, including

extensions) should attach an

This rule is also applied to other

Part I—General

explanation to the return to show

lineal descendants. For example, if

reasonable cause.

Information

property is transferred to an individual

Section 6662 provides penalties for

who is a descendant of a parent of the

underpayments of GST taxes which

transferor, and that individual’s parent

Line 1b. Trust’s Employer

exceed $5,000 that are attributable to

(who is a lineal descendant of the

Identification Number

valuation understatements. A

parent of the transferor) is deceased at

All trusts filing Form 706-GS(T) must

substantial valuation understatement

the time the transfer is subject to gift or

have an employer identification number

occurs when the value of property

estate tax, then for purposes of

(EIN). A nonexplicit trust as described

reported on Form 706-GS(T) is 65% or

generation assignment, the individual is

on page 1 under Who Must File must

less of the actual value of the property.

treated as if he or she is a member of

have an EIN that is separate from any

the generation that is one generation

Interest will be charged on taxes not

other entity’s EIN and that will be used

below the lower of:

paid by their due date, even if an

•

only by the entity in its capacity as the

The transferor’s generation or

extension of time to file is granted.

•

nonexplicit trust.

The generation assignment of the

Interest is also charged on any

youngest living ancestor of the

A trust or nonexplicit trust that does

additions to tax imposed by section

individual, who is also a descendant of

not have an EIN should apply for one

6651 from the due date of the return

the parent of the transferor.

on Form SS-4, Application for Employer

(including any extensions) until the

Identification Number. You can get

addition to tax is paid.

The same rules apply to the

Form SS-4, and other IRS tax forms

Return preparer. The Small Business

generation assignment of any

and publications, by calling

and Work Opportunity Tax Act of 2007

descendant of the individual.

1-800-TAX-FORM (1-800-829-3676) or

(Act) extends the application of return

by accessing the IRS website at www.

preparer penalties to all tax return

This rule does not apply to a transfer

irs.gov.

preparers. Under section 6694, as

to an individual who is not a lineal

Send Form SS-4 to the Internal

amended by the Act, and the

descendant of the transferor if the

Revenue Service Center listed under

transitional relief provided by Notice

transferor has any living lineal

Where To File on page 1. If you do not

2007-54, 2007-27 I.R.B. 12, tax return

descendants.

receive the EIN by the filing time for the

preparers, who prepare any return or

GST form, write “Applied for” on line 1b.

If any transfer of property to a trust

claim for refund which reflects an

understatement of tax liability due to

would have been a direct skip except

You can also apply for an EIN online

willful or reckless conduct, are subject

for this generation assignment rule,

at or obtain an

then the rule also applies to transfers

to a penalty of $5,000 or 50% of the

EIN immediately by calling

income derived (or income to be

from the trust attributable to such

1-800-829-4933.

derived), whichever is greater, for the

property.

preparation of each such return. See

Part II—Trust

Ninety-day rule. For purposes of

section 6694; Notice 2008-11, 2008-3

Information

determining if an individual’s parent is

I.R.B. 279; Notice 2008-13, 2008-3

deceased at the time of a testamentary

I.R.B. 282; and Notice 2008-46,

transfer, an individual’s parent who dies

2008-18 I.R.B. 868 for more details.

Line 4

no later than ninety days after a

Whenever property is transferred into a

transfer occurring by reason of the

Signature

pre-existing trust, the inclusion ratio

death of the transferor is treated as

Form 706-GS(T) must be signed by the

must be refigured. See Multiple

having predeceased the transferor. The

transfers on page 6 for the rule on how

trustee or by an authorized

ninety-day rule applies to transfers

to refigure the inclusion ratio.

representative.

occurring on or after July 18, 2005. See

If you fill in your own return, leave

Regulations section 26.2651-1, for

Line 7

the Paid Preparer’s space blank. If

more information.

If a qualified terminable interest

someone prepares your return and

property deduction was taken by the

does not charge you, that person

Multiple Skips

settlor as donor spouse or by the

should not sign the return.

If after a generation-skipping transfer,

executor of a decedent settlor’s estate

Generally, anyone who is paid to

the property transferred is held in trust,

for the transfer of any property into this

prepare the return must sign the return

then for the purpose of determining the

trust, the donor spouse or the executor,

in the space provided and fill in the

taxability of subsequent transfers from

as the case may be, may have made

Paid Preparer’s Use Only area. See

the trust involving that property, the

an election at that time to treat such

section 7701(a)(36)(B) for exceptions.

transferor of the property is assigned to

transfer for the purpose of the GST tax

the first generation above the highest

In addition to signing and completing

as if it was not qualified terminable

generation of any person who has an

the required information, the paid

interest property. In this case, you must

interest in the trust immediately after

preparer must give a copy of the

refer to the gift tax return (Form 709,

the initial transfer.

completed return to the taxpayer.

United States Gift (and Generation-

-3-

Instructions For Form 706-Gs(T) - Generation-Skipping Transfer Tax Return For Terminations - 2008 Page 3

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