Can an IRS account record substitute for an estate tax closing letter?
Key takeaway
An IRS account record can serve as the functional equivalent of an estate tax closing letter when it shows transaction code 421 with the explanation that the examination is closed. Owners of businesses, real estate and private investments, and their families, meet this substitute after an estate tax return has been filed. Washington also accepts the account record in place of the letter.
What transaction code 421 indicates
IRS guidance states that transaction code 421 indicates Form 706 was accepted as filed or the examination is complete. The code is an entry on the account record for the estate tax return, and the entry carries that meaning.
An account record is a record of activity on the estate's tax account with the IRS. Two situations lead to the same entry, one in which the return was accepted as filed and one in which an examination ran to completion.
How closing letter requests work
The IRS issues estate tax closing letters upon taxpayer request. Account records may substitute for the letter, so a request is one route to a document and the account record is another.
A closing letter request goes through Pay.gov and carries a fee. The IRS describes a wait of at least 9 months after filing Form 706 before the request is made.
The fee applies to the request for the letter. An account record showing code 421 is a separate document that the IRS describes as a possible substitute.
What Washington accepts
Washington accepts IRS account records instead of an estate tax closing letter when the record shows code 421 and the statement "Closed examination of tax return." The code and the statement are the two elements Washington names for an acceptable record.
An owner whose estate has a Washington filing therefore meets two identifiers on the account record. Both the code and the statement appear on the same record, and Washington treats that record as the stand-in for the letter.