Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Tuesday, December 25, 2012

The “Tax” Grinch That Stole Christmas

IRS 2The IRS had decided to take a six-day absence from issuing Employee Identification Numbers (EINs) upon the eve of the end of $5.12 Million lifetime federal estate and gift tax exemption. This will likely place a number of estate planners and their clients who are looking to set up trusts to make last minute lifetime gifts in a difficult situation. Trusts, which are considered to be tax entities, need an EID. The IRS released this notification on its webpage, the place where estate planners would go to obtain an EID for a their client’s particular trust. The IRS stated that this six-day period will begin at 6:00 a.m. on December 27th and last through 6:00 a.m. on January 2nd.

This is the not the first time that attorneys have had difficulties with the IRS’s webpage. Many times, the webpage will not produce an EID when an attorney applies for one. There is one exception that some attorneys can use but only if they are establishing a grantor trust. A grantor trust is a board spectrum term that usually applies to when the grantor, or the settlor as he or she is otherwise known, “retains certain rights or powers.” In this instance, “a grantor trust is not treated as a separate entity for income tax purposes and the grantor…must pay tax on trust earnings.” In that case, an attorney can use the grantor’s social security number.  

See Deborah L. Jacobs, IRS Is Grinch Who Stole Tax ID Numbers, Forbes, Dec. 23, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

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