Form M706r - Recapture Tax Return - Minnesota Department Of Revenue (Page 3 of 4) in pdf

Near final 9/13/13

Form M706R Instructions

For estates that are required to pay recapture tax relating to the qualified small business

property and qualified farm property deductions.

Purpose of Schedule M706R

need the decedent’s last name, date of

days after the date you were notified that a

birth, date of death and your bank rout-

penalty has been imposed. (M.S. 270C.34)

Schedule M706R must be filed by estates

ing and account numbers. When paying

who are required to pay an additional estate

Interest

electronically, you must use an account

tax (or recapture tax) imposed on the quali-

Interest is calculated as simple interest and

not associated with any foreign banks.

fied small business property or qualified

accrues on unpaid tax and penalties begin-

farm property deductions.

To be timely, you must complete your

ning six months after the date of disposition

transaction and receive a confirmation

Who Should File

or cessation. The rate of interest may change

number on or before the due date for

from year to year. (M.S. 270C.40)

An estate must file a recapture tax form if:

that payment.

The interest rate for 201X and 201X is 3

• The estate elected the qualified small busi-

Pay by Check

percent.

ness property or qualified farm property

Make your payment by check on PVXX

Use of Information

deduction against their estate tax on

for any recapture tax payments. Make

Schedule M706Q; and

All information you enter on the return is

your check payable to Minnesota Rev-

private under state law. It cannot be given

Either:

enue.

to others without your consent except to

• For the small business property deduc-

Penalties

the IRS, other Minnesota state agencies and

tion, a family member did not materially

Late payment. A late payment penalty

other state governments that are authorized

participate in the operation of the trade

will be assessed on any tax not paid by

by law to receive the information and must

or business for three years following the

the regular payment due date. The pen-

treat the information as private.

decedent’s death,

alty is 6 percent of the unpaid tax.

The decedent’s Social Security number is

• For the farm property deduction, a family

If you file your Minnesota recapture tax

required by M.S. 270C.306. Although your

member did not maintain 2a property

return after the regular filing due date

— the executor’s or heir’s — Social Security

classification for three years following the

and you don’t pay the tax as reported on

number is requested on Form M706R, you

decedent’s death; or

your return at the time you file, an ad-

are not required to provide it. We ask for

• The qualified heirs disposed of any inter-

ditional 5 percent late payment penalty

your Social Security number so the depart-

est in the qualified property other than to

will be assessed on the unpaid tax. (M.S.

ment can correctly identify you, because you

a family member during the three years

289A.60, subd. 1)

are responsible for paying the recapture tax

following the decedent’s death.

if the tax is not paid by the qualified heirs.

Late filing. If you file the return after

(M.S. 289A.10, subd. 1a)

Assembling Required Informa-

the filing due date, a late filing penalty

When to File

tion

will be assessed on the unpaid tax. The

The recapture tax return must be filed within

penalty is 5 percent of the unpaid tax.

You must attach the following to Form

six months after the date of disposition or

(M.S. 289A.60, subd. 2)

M706R:

cessation.

Failing to file with intent to evade tax or

• If a family member did not materi-

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

filing a false or fraudulent return. A pen-

ally participate in the operation of the

alty of 50 percent of the tax due is added

When to Pay

qualified small business property trade or

to the tax if you fail to file or file a false

business, provide information as to when

The recapture tax payment is due and pay-

or fraudulent return with intent to evade

their participation stopped being mate-

able within six months after the date of

payment of the Minnesota recapture tax.

rial.

disposition or cessation.

This penalty is in addition to any other

• If a family member did not maintain 2a

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

penalties that may apply. (M.S. 289A.60,

property classification for qualified farm

If good cause exists, the department may ex-

subd. 6)

property, provide a copy of the property

tend the time for payment for a period of not

tax statement.

Criminal penalties. If you willfully fail

more than six months. To request a payment

to file a return in order to evade paying

• If the qualified heirs disposed of any

extension, submit your request in writing to

the tax, you could be charged with a

interest in the qualified property, provide

the department prior to the regular due date.

gross misdemeanor. If you file a fraudu-

a copy of the sales document, deed, or

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

lent return in order to evade paying all

Form M706r - Recapture Tax Return - Minnesota Department Of Revenue Page 3

Related Articles

Related forms

Related Categories