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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal><span style='color:#1F497D'>Eric: Let me know what you find. To get discharged, the PR declares that all taxes have been paid, which would not be true if there was a claim. Also, the federal tax law takes precedence over Washington’s probate law. I think a laches defense would work if the IRS does not act within six years or so. My 9 year late claim case was resolved on the merits, that there had been an IRS mistake in I assigning to my client the income reported when his wife cashed his IRAs following his divorce. I do not know if the IRS then went after the wife.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'> Tom<o:p></o:p></span></p><div><div style='border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b>From:</b> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com] <b>On Behalf Of </b>Eric Nelsen<br><b>Sent:</b> Friday, December 12, 2014 1:37 PM<br><b>To:</b> WSBA Probate & Trust Listserv<br><b>Subject:</b> Re: [WSBAPT] Administrator duty to search for indications of pre-death unfiled tax returns?<o:p></o:p></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>I like it for the potential coverage, but I wonder what I would advise a PR to do if say, we discover that the decedent didn't file a return 15 years ago. Unlikely to have any remaining documentation concerning income in that year...I guess we'd ask the IRS for any W-2s and 1099s reporting income for that year, and file a return only for the income that had been reported to the IRS?<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>This is one of those scenarios where I think I'd prefer to advise the PR to meet only the minimum duty to investigate, and otherwise let sleeping dogs lie. Maybe my real research should be focused on figuring out whether or not the IRS's ability to pursue a fiduciary is discharged upon closure of the Estate along with all other PR liability.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Sincerely,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Eric<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Eric C. Nelsen<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>1320 University St<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Seattle WA 98101-2837<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>phone 206-625-0092<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>fax 206-625-9040<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Roger Hawkes<br><b>Sent:</b> Friday, December 12, 2014 1:13 PM<br><b>To:</b> WSBA Probate & Trust Listserv<br><b>Subject:</b> Re: [WSBAPT] Administrator duty to search for indications of pre-death unfiled tax returns?<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>Your exchange has led me to modify our procedures. It may be a hammer on a mosquito, but it’s a light, cheap hammer. We will routinely ask for tax filing history from IRS unless the PR has good evidence that all prior returns are filed. Seems like a very simple, quick, and easy protection for our PRs. Does anyone see a problem with doing that as a routine?<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><p class=MsoNormal><span style='color:#1F497D'>Roger Hawkes, WSBA # 5173<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>19909 Ballinger Way NE<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Shoreline, WA 98155<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><a href="http://www.hawkeslawfirm.com">www.hawkeslawfirm.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>206 367 5000<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>Fax is 206 367 4005<o:p></o:p></span></p></div><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'> Eric Nelsen [<a href="mailto:Eric@sayrelawoffices.com">mailto:Eric@sayrelawoffices.com</a>] <br><b>Sent:</b> Friday, December 12, 2014 10:22 AM<br><b>To:</b> WSBA Probate & Trust Listserv<br><b>Subject:</b> Re: [WSBAPT] Administrator duty to search for indications of pre-death unfiled tax returns?<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>Thanks Tom! Do you think a PR's liability to the IRS survives discharge following closure of an estate (<a href="http://app.leg.wa.gov/rcw/default.aspx?cite=11.96A.070">RCW 11.96A.070(2)</a>)? I am thinking of just the kind of nightmare-for-the-PR scenario you mention: PR searches the decedent's papers but doesn't see any problem, completes the probate and is discharged, and then IRS pursues the PR for liability on decedent's unfiled tax return from a decade before. Under IRS rules, there is no statute of limitations on unreported tax years; the S/L doesn't start accruing until a return is filed.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>It seems to me, your standard operating procedure and mine are the same: PR needs to review the decedent's papers, but unless something obvious crops up, there is no duty to explicitly ask the IRS whether the decedent has filed all previous tax returns. I think that's right; but the Form 56 led me to second thoughts.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Sincerely,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Eric<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Eric C. Nelsen<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>1320 University St<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>Seattle WA 98101-2837<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>phone 206-625-0092<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt;color:#1F497D'>fax 206-625-9040<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma",sans-serif'> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Tom Stuen<br><b>Sent:</b> Thursday, December 11, 2014 5:14 PM<br><b>To:</b> 'WSBA Probate & Trust Listserv'<br><b>Subject:</b> Re: [WSBAPT] Administrator duty to search for indications of pre-death unfiled tax returns?<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'>Eric: I use a form 5495 request for release. And obtain a transcript if it appears that tax returns were not filed. I think the PR is responsible for taxes to the extent of funds distributed to beneficiaries. I once represented an estate where the deceased received a deficiency notice 9 years after he had failed to file.<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'> Tom Stuen<o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b>From:</b> <a href="mailto:wsbapt-bounces@lists.wsbarppt.com">wsbapt-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbapt-bounces@lists.wsbarppt.com">mailto:wsbapt-bounces@lists.wsbarppt.com</a>] <b>On Behalf Of </b>Eric Nelsen<br><b>Sent:</b> Thursday, December 11, 2014 3:25 PM<br><b>To:</b> WSBA Probate & Trust listserve (<a href="mailto:wsbapt@lists.wsbarppt.com">wsbapt@lists.wsbarppt.com</a>)<br><b>Subject:</b> [WSBAPT] Administrator duty to search for indications of pre-death unfiled tax returns?<o:p></o:p></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>How far does a PR's duty go to determine if a decedent failed to file income tax returns? I have typically made sure that the decedent's final 1040 is done, but unless something obvious crops up in the review of decedent's papers, I don't do a huge search or explicitly query the IRS for records to ensure they've been filed in all prior years.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I ask because I am having second thoughts about IRS Form 56, Notice of Fiduciary Relationship. The instructions seem to require filing one for PR as fiduciary for the estate (that is, estate tax and post-death income), and one for PR as fiduciary for the decedent (that is, pre-death income). In Section B entitled "nature of liability and tax notices," it essentially asks the PR to say, "yeah, I'm liable for all income tax returns of the decedent." Seems a bit much to me.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Am I overthinking?<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='font-size:12.0pt'>Sincerely,<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>Eric<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>Eric C. Nelsen<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>SAYRE LAW OFFICES, PLLC<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>1320 University St<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>Seattle WA 98101-2837<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>phone 206-625-0092<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:12.0pt'>fax 206-625-9040<o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>