Rev. Proc. 2022-39: Simplified Method for Disclosures

The Internal Revenue Service (IRS) provides a simplified method for certain estates to make a late portability election through Revenue Procedure 2022-32. This procedure offers relief from the previously required, more burdensome process of requesting a private letter ruling (PLR). The purpose of this revenue procedure is to grant an extension of time for estates that are not otherwise required to file an estate tax return to elect portability. This allows a surviving spouse to utilize the deceased spouse’s unused federal estate tax exemption.

This administrative relief simplifies the process for many, reducing both the cost and complexity associated with the former PLR process. The introduction of a five-year window provides an opportunity for estates that may have missed the standard filing deadline to secure a tax benefit.

Understanding Portability and the DSUE Amount

The federal government imposes a tax on the transfer of a person’s assets after their death, known as the estate tax. However, a significant portion of an estate is exempt from this tax through the basic exclusion amount, a specific dollar value that can be transferred without incurring estate tax. For 2025, this amount is $13.99 million per individual, a high threshold meaning the vast majority of estates do not owe any federal estate tax.

Portability is a provision in federal tax law that allows a surviving spouse to use any unused portion of their deceased spouse’s estate tax exemption. This unused portion is referred to as the Deceased Spousal Unused Exclusion (DSUE) amount. The concept of portability is a permanent part of the tax law, designed to help married couples with their estate planning. However, the current high federal estate tax exemption is temporary. Under current law, the exemption amount is scheduled to be reduced to approximately $7 million at the beginning of 2026.

To illustrate how the DSUE amount is calculated, consider a scenario where the first spouse dies in a year when the federal exemption is $13.99 million. If that deceased spouse’s estate had a total value of $3.99 million, the estate would use that amount of the exemption, leaving an unused portion of $10 million. By making a portability election, the executor of the deceased spouse’s estate can transfer this $10 million DSUE amount to the surviving spouse.

This transferred DSUE amount can then be used by the surviving spouse to shelter their own gifts during their lifetime or the assets in their estate at their death from federal gift or estate tax. The surviving spouse would have their own $13.99 million exemption plus the $10 million DSUE amount from their deceased spouse. This gives the surviving spouse a total available exemption of $23.99 million.

Eligibility for the Simplified Method

To utilize the simplified method for a late portability election under Rev. Proc. 2022-32, an estate must meet several requirements. The decedent must have been a U.S. citizen or resident on their date of death, and this death must have occurred after December 31, 2010. The procedure is designed for estates of decedents who were survived by a spouse.

A central condition for eligibility is that the estate must not have been required to file a federal estate tax return. An estate is mandated to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, only if the value of the gross estate plus adjusted taxable gifts exceeds the basic exclusion amount for the year of death. This simplified method is for smaller estates filing voluntarily for the sole purpose of electing portability.

The executor of the estate must not have filed a timely estate tax return. The standard deadline for filing Form 706 and making the portability election is nine months after the decedent’s death, or 15 months with a six-month extension.

The executor must file the late Form 706 on or before the fifth anniversary of the decedent’s date of death. This five-year period is a firm deadline. If an estate meets all other criteria but this five-year window has closed, it cannot use the simplified method.

Required Information and Form 706 Preparation

Successfully using the simplified method hinges on filing a “complete and properly prepared” Form 706. The executor must compile a comprehensive inventory of all assets the decedent owned at the time of death. This includes tangible assets like real estate and personal property, as well as financial assets such as bank accounts, brokerage accounts, and retirement accounts.

Each asset must be valued at its fair market value as of the decedent’s date of death. For some assets, such as real estate or business interests, it may require a formal appraisal to substantiate the value reported on the tax return. The executor must also gather documentation for any debts of the decedent, funeral costs, and administrative expenses for the estate, as these are reported as deductions.

Once all necessary financial data is collected, the executor can complete the Form 706. The most important section for this purpose is Part 6—Portability of Deceased Spousal Unused Exclusion (DSUE). This is where the calculation of the DSUE amount is formally reported.

In Part 6, the executor will enter the basic exclusion amount for the year of death, subtract the value of the decedent’s taxable estate, and arrive at the resulting DSUE amount being passed to the surviving spouse. The form requires a detailed reconciliation of all assets and deductions to arrive at the taxable estate figure used in this calculation.

A specific notation is required by the revenue procedure. The executor must write the statement “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY” at the very top of the Form 706. This notation flags the return for special handling and is required for the IRS to process the late election.

The Filing Process and Post-Filing Expectations

After preparing a complete Form 706, the executor must mail the return to the Department of the Treasury, Internal Revenue Service Center, in Kansas City, Missouri. The specific address can be found in the official instructions for Form 706. It is advisable to send the return using a mailing service that provides proof of delivery to document that the filing was made within the five-year deadline.

Under Rev. Proc. 2022-32, the late portability election is considered automatically granted once the IRS receives the complete and properly prepared Form 706. The executor will not receive a separate confirmation letter or a formal ruling from the IRS approving the late election. The act of filing the return itself secures the election, provided all requirements have been met.

While the election is deemed granted upon filing, the Form 706 is still subject to examination and audit procedures. The IRS retains the right to examine the return to verify the accuracy of reported asset valuations, deductions, and the DSUE amount calculation. The estate should maintain all supporting documents, such as appraisals and financial statements, in case of a future inquiry.

When the Simplified Method is Not an Option

There are circumstances where an estate is not eligible to use the simplified method offered by Rev. Proc. 2022-32. The most common reason for ineligibility is the expiration of the five-year deadline. If more than five years have passed since the decedent’s date of death, this simplified path is no longer available.

For estates that fall outside the five-year window or were otherwise required to file an estate tax return, the only remaining avenue for a late portability election is to seek a Private Letter Ruling (PLR) from the IRS. A PLR is a formal, written determination issued by the IRS in response to a taxpayer’s request that interprets and applies tax laws to their unique set of facts.

Requesting a PLR is a significantly more involved and costly process. The estate must submit a detailed request that includes a full statement of facts, legal analysis, and arguments for why relief should be granted, demonstrating they acted reasonably and in good faith.

The PLR process also involves a user fee paid to the IRS, which can be several thousand dollars. In addition, estates require the assistance of tax attorneys or accountants to prepare the complex submission, adding professional fees to the cost. Unlike the simplified method, a favorable outcome with a PLR is not guaranteed, as the IRS evaluates each request on its own merits and can deny it.