How to Reconcile a Deceased Person's Back Taxes
- 1). Download and print Form 4506-T from the IRS website. This form, called the Request for Transcript of Tax Return, will generate a Record of Account, which will be mailed to you. Alternately, you can request the form in person at a local IRS office and receive a Record of Account the same day.
- 2). Complete Form 4506-T and mail it to the address on the form. You must list the name of the taxpayer, the type of return and the taxpayer's Social Security number. Write "deceased" after the taxpayer's name and sign your own name at the bottom of the return. Write "executor" after your name. Provide a copy of the legal document declaring you th executor for the deceased.
- 3). Receive and review the Record of Account, which will show the total tax liability and adjustments for any payments or penalties. Essentially, this document will list the balance owed.
- 4). Contact an IRS agent by phone and ask about collection efforts. The agent can tell you whether the IRS has placed a lien on property or has taken other measures to secure the debt.
- 5). Decide how to reconcile the debt. You have options. You can propose an Offer in Compromise, which allows you to pay less than what is owed. To do this, you will need to demonstrate via the filing of IRS forms that the decedent has few or no assets that could be levied and sold by the IRS to pay the debt. You also must complete Form 656-A and include a $150 application fee. An installment agreement is another option, but this does not work well when the taxpayer is deceased. You also can pay the tax debt in full out of the estate or convince the IRS that the debt is uncollectable. If the decedent has assets, the latter option is unlikely to work.
- 6). Secure the funds from the estate to pay the tax debt. You might need to close accounts and withdraw funds to pay the debt. You might need to sell some or all of the decedent's assets to pay the debt.
- 7). Ensure that the IRS mails you a Closing Letter. This document shows that the debt was reconciled and that the decedent no longer has any past due tax liability.
Source...