E311 The Latest Probate Tax Delay is 1040 Verification

<p>Tax clearance is taking even longer lately because of a new twist: 1040 verification. Everyone agrees it’s important to keep the tax bogeyman satisfied, but all these layers of delays are frustrating our clients and us. Below we'll explain what’s happening here.</p> <h2>What is tax clearance and why does it take so long?</h2> <p><img class="aligncenter size-medium wp-image-43562" src= "https://anthonyspark.com/wp-content/uploads/2023/02/What-is-tax-clearance-and-why-does-it-take-so-long-300x169.jpg" alt="What is tax clearance and why does it take so long?" width= "300" height="169" /></p> <p>The executor needs to make sure that the IRS agrees no more taxes are due. This is important because the executor is personally liable for unpaid taxes. If the executor makes distributions to the heirs and the heirs sign indemnity agreements, then the heirs will be liable for taxes.</p> <p>Maybe you’re thinking that your loved one’s estate was so small that there’s no estate tax. We’re not just talking about estate tax, but final 1040s, payroll, small business, retirement payouts, and just about everything else. Still don’t think it applies? You’d be surprised how complex someone’s tax situation can be. The IRS is pretty good at combing through the past six years to make sure they get everything owed to them (it’s the IRS’s last chance to be paid).</p> <p>Why does it take so long, generally? As with any bureaucracy, it takes the executor a while to gather all information and past returns. (Try getting a tax transcript quickly from the IRS!). The <a href= "https://anthonyspark.com/e239-why-does-probate-tax-clearance-take-so-long/"> IRS will also take their time</a> since this is their last bite at the apple. And lately, everything related to the IRS takes way longer due to <a href= "https://anthonyspark.com/e257-how-irs-processing-delays-are-slowing-down-probate/"> unprecedented delays and backlog</a>. As you recall, the lock-downs were in 2020. It’s mind boggling how the IRS is so backed up three years later.</p> <h2>Now t