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Understanding Massachusetts's estate tax filing requirements - II

Last week, our blog began discussing how the process surrounding Massachusetts's estate tax, which is levied on a deceased person's assets and collected prior to distribution of these assets, is rather time-sensitive. Specifically, we explored how the personal representative of an estate must file the Massachusetts Estate Tax Return, otherwise known as Form M-706, within nine months of the passing of the deceased.

From there, we discussed how the failure to file the Form M-706 and remit the necessary payment within this timeframe can result in everything from fines and the accumulation of interest to the imposition of liens.

In today's post, we'll continue this discussion by examining the circumstances in which a personal representative can seek to secure an extension for either filing the M-706 or paying the estate tax owed.

Extending the time to file the M-706

In general, a personal representative may be granted an extension for a "reasonable period of time" for filing the M-706. However, the granting of this extension is conditioned upon satisfaction of the following:

  • The Application for Extension of Time to File Massachusetts Estate Tax Return (Form M-4768) must be filed prior to the due date for the M-706.
  • The estimated amount of tax to be paid, found on Line 4, Part 2 of Form M-4768, must be paid in full.

It's worth noting that if at least 80 percent of the tax finally determined to be due is not paid when due, the extension will be rendered void and a late filing penalty assessed.

Extending the time for paying estate tax

In general, a personal representative may be granted an extension for paying the estate tax owed for a "reasonable period of time" not to exceed six months by filing the Application for Extension of Time to Pay Massachusetts Estate Tax (Form M-4768A) prior to the due date for the M-706.

While there are no further conditions that must be satisfied, personal representatives should be cognizant of the fact that interest will accrue on any outstanding tax liability once the nine-month deadline passes.

It should also be noted that an extension as long as three years can be granted if it's shown that payment would result in undue hardship.

Consider speaking with an experienced legal professional if you have questions about this process, another aspect of estate taxation or the estate administration process.

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