869 / Can the time for paying the estate tax be extended?

The estate tax is due nine months after decedent’s death, whether or not an extension of time for filing the return has been granted.¹ However, an extension of time for payment of any part of the tax shown on the return, not to exceed 12 months, may be granted by the district director or the director of a service center, at the request of the executor, if an examination of all the facts and circumstances discloses that such request is based upon reasonable cause.² In addition, the Service has been given authority to enter into written agreements to pay taxes in installments when the Service determines that such an agreement will facilitate the payment of taxes.³ Interest must be paid on any extension (see “Extension of Time for Payment,” below).

Extension of Time for Payment: Reasonable Cause (ten-year maximum)

The IRS may, for “reasonable cause,” extend the time for payment of any part of the estate tax for a reasonable period not in excess of 10 years from the date the tax is due under the general rule (nine months after decedent’s death). This “reasonable cause” extension also applies to any part of any installment payment of the tax (and deficiency, if any, added to such installment) where an extension has been granted under the “closely held business interest” provisions (see Q 870).⁴ Interest is compounded daily and charged on these reasonable cause extensions at an annual rate adjusted quarterly so as to be 3 percentage points over the short-term federal rate.⁵ The underpayment rate for the second quarter of 2023 is 7 percent.⁶