To represent an estate in a gift tax exam, get a personal representative appointed by the state court

Plain-English summary

This is a short piece of Chief Counsel email advice arising from a gift tax examination involving a deceased donor's estate. The question was how someone can properly act for the estate before the IRS when no person has been appointed as the estate's personal representative. The advice: a fiduciary's capacity to litigate is determined under the law of the relevant state (here, Florida), and because Florida law appears not to authorize a trustee to act for the estate in this way, the logical step is to have the individual appointed by a Florida court as the estate's personal representative. Consistent with that, a Form 56 (notice of fiduciary relationship) should be rejected when the person lacks authority to act under local law. The advice attaches an earlier Chief Counsel memo with similar facts. It matters because it shows the IRS position that estate representation in an exam turns on a state-court appointment, not on a trustee's own assertion of authority.

Ruling snapshot

• Question: How can a person establish authority to represent a deceased donor's estate in a gift tax exam when no personal representative has been appointed?
• Outcome: Advice given (obtain appointment as the estate's personal representative from the state court; reject Form 56 absent local-law authority)
• Key authorities: Tax Court rule that a fiduciary's capacity to litigate follows state law; Florida probate law; Form 56. (No specific Internal Revenue Code section is cited.)

Full text (IRS public release)

ID: CCA_2021080609223250 [Third Party Communication:

UILC: 6019.05-00 Date of Communication: Month DD, YYYY]

Number: 202147014
Release Date: 11/26/2021
From: ---------------------
Sent: Friday, August 6, 2021 9:22:32 AM
To: -------------------------
Cc:
Bcc:
Subject: RE: Gift Tax Exam / Representation of the Estate / -----------------------

Dear ------,

We have reviewed this matter, as well as received the input of our colleagues in Branch 4. Our conclusion is that the best course of action here is to have the ------appointed by a Florida court as the estate’s personal representative. I am attaching here a CCA that was brought to my attention by Branch 4 with some similarities to the present fact pattern.

As you noted in your initial analysis, the rules of the Tax Court provide that the capacity of a fiduciary or other representative to litigate is determined in accordance with the law of the jurisdiction at issue, in this case Florida. In keeping with PA policy, we defer to your own interpretation of the substance of Florida law. Given your conclusion that there are likely no provisions of Florida law authorizing a trustee to act in this manner, and given Branch 4’s conclusion that when an individual has not been appointed as the personal representative of the estate, Form 56 should be rejected absent authority under local law, attaining personal representative status from the Florida court would be the logical conclusion. Please let me know if you have any further questions or would like to further discuss over phone Monday.

Best,
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