Liftin v. United States, No. 13-5103 (Fed. Cir. 2014)Annotate this Case
Liftin died in 2003, survived by his wife, then a citizen of Bolivia, and his son, John, who became the executor of the estate. Although John is an attorney, he retained his former law partner, who practiced tax planning. The executor had to file a federal estate-tax return, Form 706, 26 U.S.C. 6018(a), within nine months after the date of death. The statute authorizes an extension for no more than 6 months, 26 U.S.C. 6081(a). The executor obtained an extension so that the new deadline to file and to pay the tax was June 2, 2004. There were uncertainties regarding the marital deduction, 26 U.S.C. 2056(a), which is available if a surviving spouse is a citizen or becomes a citizen before the day on which the return is made. Mrs. Liftin began the process of applying for citizenship in February 2004. The estate was also engaged in litigation with Mrs. Liftin relating to her rights under a prenuptial agreement. Neither uncertainty had been resolved as of June 2, 2004. In January 2004 John made an estimated payment of $877,300, sufficient to cover the taxes due even if the estate could not claim the marital deduction. John relied on his attorney’s advice that “a late Form 706 could be filed after the extended due date” without identifying any basis for delaying filing. In 2005, Mrs. Liftin became a citizen. John, did not file the estate-tax return until 2006, when Mrs. Liftin and the estate settled their litigation. The return stated a tax liability of $678,572.25, entitling the estate to a refund of $198,727.75. The IRS assessed a $135,714.45 late-filing penalty under 26 U.S.C. 6651(a)(1). The Claims Court and Federal Circuit affirmed.