What Is Rev. Proc. 2017-58 and How Does It Work?
Learn how Rev. Proc. 2017-58 provides a path for estates to make a late portability election, preserving a deceased spouse's unused tax exclusion.
When a person passes away, federal tax law allows their surviving spouse to use any of their unused lifetime gift and estate tax exclusion. This concept, known as “portability,” can provide a tax benefit, but it requires a specific election to be made. For many smaller estates that would not otherwise need to file a federal estate tax return, the deadline for making this election was often missed.
In recognition of this, the Internal Revenue Service (IRS) established a simplified method for certain estates to get an extension of time to make the portability election. For estates that qualify, Revenue Procedure 2022-32 is now the exclusive simplified procedure for obtaining an extension, providing a straightforward path for an executor to secure the deceased spousal unused exclusion (DSUE).
Eligibility for the Simplified Method
The primary requirement is that the decedent must have been a U.S. citizen or resident on their date of death and passed away after December 31, 2010, survived by a spouse. A central condition is that the estate must not have been required to file an estate tax return in the first place. The legal obligation to file is determined by the value of the gross estate and any adjusted taxable gifts made during the decedent’s life.
This threshold is indexed for inflation, so if the total value is below the basic exclusion amount for the year of death, no return is mandated. This distinction is important because the simplified procedure is designed specifically for estates that had no other reason to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, other than to elect portability. Finally, the executor must not have filed an estate tax return within the standard time frame, as the simplified method is exclusively for those who missed the initial deadline entirely.
Preparing the Estate Tax Return
The core of the relief process is the submission of a “complete and properly prepared” Form 706. This is the same form used by estates with a mandatory filing requirement, and it must be filled out correctly to make the portability election. Preparation involves valuing the assets of the decedent’s gross estate, which can include real estate, bank accounts, investments, and other property.
Even though the total value is below the filing threshold, these figures are required to properly complete the return. The primary objective of this filing is to compute the deceased spousal unused exclusion (DSUE) amount, which is calculated on Part 6 of Form 706. To ensure the IRS processes the return correctly under the special procedure, the executor must write the following statement at the top of the Form 706: “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)”. This annotation flags the return for the specific relief being requested and is a mandatory step in the process.
Filing for Relief Under the Revenue Procedure
The deadline for submitting the return under the simplified method provided by Revenue Procedure 2022-32 is on or before the fifth anniversary of the decedent’s date of death. The completed Form 706 should be mailed to the IRS service center address specified in the form’s instructions for estate tax returns. There is no user fee required when using this simplified method.
If the estate meets all the requirements of the revenue procedure and has filed a complete and properly prepared Form 706, the relief is considered automatically granted. The IRS will not send a confirmation letter or ruling. The portability election is deemed to have been made effective as of the decedent’s date of death, and the DSUE amount becomes available to the surviving spouse for their own gift or estate tax planning.
Relief Outside of the Revenue Procedure
Estates that do not meet the specific eligibility criteria for the simplified method are not entirely without options, but the path is more demanding. If an estate is ineligible—for instance, if it was originally required to file an estate tax return but failed to do so—it must seek relief through a different channel. This involves requesting 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. The process requires the executor to submit a detailed request explaining why the estate had reasonable cause for failing to make a timely election, and it often requires professional assistance. This alternative is also more expensive and time-consuming. The IRS charges a user fee for a PLR, which can be more than $30,000, and the review and response time can take many months, with no guarantee of a favorable outcome.