• The final regulations set out rules for applying for an extension of time for certain generation transfer tax (GST) elections.— Section 2642(g)(1) of the Internal Revenue Code directs the Treasury to apply regulations to provide extensions of time when a taxpayer fails to make a timely election for:
• share the GST tax exemption for a transfer;
• waive the automatic allocation of the GST tax exemption for a direct skip;
• waive the automatic allotment of the GST tax exemption for an indirect pass-through or for transfers made to a specified trust; AND
• treat any trust as a GST-exempt trust.
This section of the IRC was enacted in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act. The Internal Revenue Service did not issue proposed regulations until 2008. In the intervening 16 years, taxpayers were directed to file under Treasury Regulations Section 301.9100-3 to request extensions of time for GST elections through a letter ruling private. The IRS will continue to process pending filings requesting Treasury regulation relief, but going forward, requests for extensions of time for GST elections must be submitted based on the final regulations published in TD 9996.
The final regulations, 89 FR 37116 (May 6, 2024) adopt the 2008 proposed regulations with some modifications. The taxpayer must demonstrate that he acted reasonably and in good faith in his request for an extension of time. The IRS may consider a (non-exhaustive) list of factors. No single factor is determinative and any single factor may be sufficient; factors may be weighted differently. The factors listed include:
• Consistency on the part of the taxpayer in granting allocations or elections;
• Prejudice against government interests;
• If an advantage was gained by waiting to make the choices (mirror);
• Timing of the request for relief;
• Intervening taxable events; AND
• Divisions and elections in time
The taxpayer must include detailed statements as part of the application. The statement must describe the events that led to the failure to make the intended allocation or selection and the events that led to the discovery of the failure. Additionally, in certain circumstances, statements are required from parties involved in the transaction, such as the tax preparer and other tax advisors or professionals who advised or consulted the taxpayer.
• IRS Notice 2024-35 Continues Waiver for Failure to Receive 2024 RMD—In 2022, the IRS proposed regulations that generally provided that a non-qualified beneficiary who inherited a retirement account after the account owner's required start date must take the account owner's required minimum distributions (RMDs). These beneficiaries must take RMDs and withdraw from the account by the end of the 10thth calendar year after the account owner's death. The IRS further provided that a beneficiary who failed to receive such RMDs would be subject to excise tax. In response to commenters' confusion about the proposed regulations, the IRS later issued Notices 2022-53 and 2023-54, providing transitional relief by waiving the excise tax for failure to obtain such RMDs. The most recent announcement extends that relief until 2024. These announcements only remove the penalties; they do not waive the RMD requirements. The IRS expects to have final regulations that will apply to calendar year 2025 RMDs.