Compliance Question of the Week

 

Would we use the executor’s SSN on an estate account as opposed to the deceased member’s? Would this decision be due to IRS Ruling 84-73?

Actually, the personal representative can apply and get an Employer Identification Number (EIN) for the estate. The estate account may either be set up under the EIN or the Social Security Number (SSN) of the deceased. The estate would report under that for tax purposes.

You should not use the SSN of the personal representative to set up the estate account.

Internal Revenue Service (IRS) Ruling 84-73 specifies that interest paid or credited prior to the decedent’s date of death is reported in the member’s name using their SSN. Interest paid or credited after the date of death needs to be reported in the name and Tax Identification Number (TIN) of the new owner, either the account beneficiary or the decedent’s estate.

IRS Publication 559 is a good resource for the decedent account rules from the IRS. The primary duties of a personal representative are to collect all the decedent’s assets, pay the creditors and distribute the remaining assets to the heirs or other beneficiaries.

The personal representative must also perform the following duties:

  • Apply for an EIN for the estate. This is the first action you should take if you are the personal representative for the decedent. You should apply for this number as soon as possible, because you need to enter it on returns, statements and other documents you file concerning the estate. You also must give the number to payers of interest and dividends and other payers who must file a return concerning the estate.

    You can get an EIN by applying online or by calling 1-800-829-4933 during the week. If you apply online, you will generally receive your EIN immediately upon completing the application. You can also apply using Form SS-4, Application for Employer Identification Number. Generally, if you apply by mail, it takes about four weeks to get your EIN. See the form instructions for other ways to apply.

  • File any income tax return and the estate tax return when due. Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. After a decedent’s death, Forms 1099 must reflect the identification number of the estate or beneficiary to whom the amounts are payable. As the personal representative handling the estate, you must furnish this identification number to the payer. For example, if interest is payable to the estate, the estate’s EIN must be provided to the payer and used to report the interest on Form 1099-INT, Interest Income. If the interest is payable to a surviving joint owner, the survivor’s identification number must be provided to the payer and used to report the interest.

    If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent’s death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). Complete this form to inform the payer of the estate’s (or if completed by the survivor, the survivor’s) identification number and return it to the payer.

  • Pay the tax determined up to the date of discharge from duties. Do not use the deceased individual’s identifying number to file an individual tax return after the decedent’s final tax return. Also, do not use it to make estimated tax payments for a tax year after the year of death. 

Related Links
IRS Publication 559

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance, Financial Education.