The “Tax” Grinch That Stole Christmas

The IRS had decided to take a six-day absence from issuingEmployee Identification Numbers (EINs) upon the eve of the end of $5.12 Millionlifetime federal estate and gift tax exemption. This will likely place a numberof estate planners and their clients who are looking to set up trusts to makelast minute lifetime gifts in a difficult situation. Trusts, which are considered to be tax entities, need an EID. The IRS released thisnotification on its webpage, the place where estate planners would go to obtainan EID for a their client’s particular trust. The IRS stated that this six-dayperiod will begin at 6:00 a.m. on December 27^th and last through6:00 a.m. on January 2^nd.

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

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

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