When someone passes away, their executor or personal representative may have to deal with their unfiled tax returns, which may include the current year’s return or returns from years past.
Unfiled returns are a fairly common issue in estate administration, and it’s important to remember that unfiled returns do not automatically equal unpaid taxes. However, unresolved tax issues can delay administration of the estate, so it is important to address them promptly.
Learn more about your obligations and next steps now by calling Wiggam Law at 404-609-1300.
Key Takeaways:
- Unfiled tax returns are often discovered after death, typically as a result of incomplete records or changes in tax management late in life.
- Executors are responsible for filing missing returns.
- Taxes owed become claims against the estate
Do Tax Obligations End When Someone Dies?
No. Death does not eliminate tax requirements. Instead, after death, tax obligations shift to the decedent’s estate. The executor of the estate may need to deal with unfiled returns, unpaid taxes, or tax liens.
However, it’s important to distinguish between responsibility and liability. An executor is responsible for filing required tax returns and addressing tax debt using the estate assets. An executor is not liable for unpaid tax debt just because they are the executor.
It’s common for surviving family members to worry that missing returns will inevitably lead to tax debt, but in many cases, filing returns doesn’t lead to tax debt. Even if there is some tax debt caused by late tax returns, that is the responsibility of the estate.
Which Tax Returns Do Executors Need to File?
After someone passes away, the executor may need to hire a tax professional to file several returns, including:
- Final income tax return of the deceased person – Form 1040, which accounts for income earned in the year in which the individual passed away.
- Income tax returns from previous years – Form 1040 from the years in which the decedent had a filing requirement but didn’t file.
- Estate income tax return – Form 1041 required if the estate generates more than $600 in income during the tax year. This often occurs if there are CDs, bonds, stocks, savings accounts, rental properties, or other assets that generate income after an individual passes away and before the estate is closed.
- Estate tax return – Form 706 required if the value of the estate exceeds the estate tax exemption ($15 million as of 2026), with respect to taxable gifts that reduce the exemption. If an estate tax return is required, an estate tax lien will automatically attach to all of the estate’s assets.
If the decedent owned a business or was self-employed, it’s important to remember business tax returns that may be required. Unless someone else takes over the business’s filings, the executor may need to arrange for corporate returns, payroll tax filings, sales tax returns, and other business returns. It is particularly important to have professional guidance in this area.
How Executors Find Out About Unfiled Tax Returns
Issues with unfiled returns may come to light in several different ways. An experienced executor may already know about their obligation to handle outstanding tax issues before paying other debts and distributing assets. They may find out about unfiled returns due to:
- IRS notices – Notices in the decedent’s paperwork or letters that arrive after their death can alert the executor about the unfiled taxes.
- Accountant records – The decedent’s accountant will generally have records of which returns have been filed.
- Online IRS account – The decedent’s online IRS account will show which returns have been filed and if any taxes are owed. If an executor can’t access the online account, they can request a transcript, but they will have to prove that they are the executor.
Across the board, IRS transcripts are often the most reliable way to identify missing returns. The executor can obtain this information by contacting the IRS with the deceased’s full name, address, and Social Security number. They must also provide a copy of the death certificate and either a court-approved Letters of Testamentary or Form 56, Notice Concerning Fiduciary Relationship.
The Executor’s Legal Duty to File Missing Returns
The executor has a fiduciary duty to ensure that missing tax returns are filed and submitted. This duty exists even if no tax debt arises from the returns in question. Filing missing returns serves several purposes:
- Establishes if there’s any tax liability that has yet to be paid.
- Allows the IRS to formally assess tax liability claims against the estate.
- Prevents unresolved tax issues from delaying probate.
Interest and penalties may continue to accrue until the returns are filed. When an executor proactively files unfiled returns, they may be in a stronger position to request penalty abatement or other forms of relief.
Can an Executor Be Personally Liable for Unfiled Taxes?
This is an incredibly common question that executors have, and for good reason – no one wants to help the family by managing an estate, only to end up on the hook for thousands or millions of dollars of tax debt.
The good news is that executors do not become personally responsible for the deceased’s tax debt just because they are the executor. Any tax debt the deceased had is now the responsibility of the estate.
However, personal liability may arise if an executor fails to fulfill their fiduciary duty. Common scenarios include:
- Distributing the estate’s assets before handling IRS claims
- Paying lower-priority creditors ahead of the IRS
- Ignoring tax obligations
- Failing to file missing tax returns
When these situations occur, the IRS has the right to pursue the executor personally. IRS tax debt takes priority over almost all unsecured estate debts (for example, credit cards or loans without collateral). If the executor pays those debts first, the estate may not have enough money to cover its tax debts, and the IRS may decide to pursue personal liability.
How can executors avoid this risk? They must follow IRS priority rules and state probate requirements to the letter. If an executor is concerned about legal exposure, they may also want to work with a tax attorney to handle the decedent’s unresolved tax issues.
What Happens If You Discover Unfiled Returns Mid-Probate?
Discovering unfiled returns doesn’t necessarily derail estate administration. However, it can affect the timing and process that the executor must follow. Consequences may include delays in closing probate until tax issues are fully resolved, accrual of additional penalties and interest, and restrictions on estate distributions. The sooner an executor handles unfiled tax returns, the sooner they can move forward with estate administration.
Common Executor Mistakes
Some of the most common estate tax issues stem from understandable executor mistakes, particularly in cases involving someone who’s never executed an estate before.
These mistakes may include:
- Assuming the decedent handled their taxes and never pulling a tax transcript to verify.
- Making early distributions to heirs (common when an executor is facing intense pressure from family members and beneficiaries).
- Treating IRS claims as lower priority than other unsecured debts.
- Not seeking professional tax guidance when records are incomplete or overwhelming.
These issues may be understandable, but they are also largely avoidable. An executor who immediately begins looking for tax issues and follows professional guidance on the matter dramatically reduces their risk of personal liability.
Practical Steps to Take
An executor can begin by requesting the deceased’s tax transcript from the IRS. With that in hand, they can go through it year by year to verify filing and payment history.
Upon determining which years are unpaid, they should then file all required returns (usually just the last six years), regardless of whether or not they can pay any subsequent tax debt right away. Once returns are filed and taxes are assessed, the executor can take steps to request payment relief or assistance.
Resolution Options When the Estate Cannot Pay Immediately
It takes time to liquidate estate assets and manage an estate, so payment in full may not be possible right away. If the estate has lingering tax debt, the executor may be able to request:
- Penalty abatement
- Payment plans structured around the liquidation of estate assets
- Resolution strategies that fit the probate timeline
The options available depend on the specific details of the decedent’s tax debt, estate size, and available assets.
When to Involve a Tax Attorney
A tax attorney can provide professional guidance in any situation where a decedent has unfiled tax returns. We highly recommend professional assistance when:
- There are multiple years of unfiled returns
- The tax debt is extremely high
- The estate includes business or payroll tax issues
- The IRS has filed tax liens
- There are multiple urgent notices from the IRS, including levy notices.
At Wiggam Law, we understand that you’re managing a lot as an estate executor. Navigating tax problems adds another layer of stress to this situation, particularly if you’ve never had to file late returns or explore tax payment options before. We’re here to help you navigate the entire process, from identifying missing returns to resolving IRS claims.
Take the first step now by calling us at 404-609-1300 or getting in touch online. We can also help if you’re planning ahead and want to protect your heirs from tax debt.
FAQs on Unfiled Returns After Death
Who files unfiled tax returns after someone dies?
The executor or personal representative of the estate files required returns on behalf of the decedent. They also handle any tax filings required for the estate itself.
Why did the IRS send Form 15103?
The IRS uses Form 15103 to find out why someone hasn’t filed a tax return. If you receive this form on behalf of a deceased person, fill out the section of the form related to a deceased taxpayer. Explain why they didn’t need to file, why the return is late, or that it’s already been filed.
How far back can the IRS require unfiled returns?
Technically, the IRS can go back as far as it wants when requiring unfiled returns to be submitted. In practice, they typically consider a taxpayer compliant as long as the last six years of returns are filed.
Do heirs become responsible for unpaid taxes?
No. Neither heirs nor the executor take on responsibility for unpaid taxes. Any payments made come from the estate assets. If there are no assets left and tax debt still remains, it does not pass to any beneficiaries or the executor.
When should an executor contact a tax attorney?
Executors should seek professional help when they don’t know how to move forward with unfiled returns, they don’t know how to identify missing returns, or they cannot figure out how to address tax issues so that probate can continue.
Resources:
https://www.irs.gov/individuals/deceased-person
https://www.irs.gov/individuals/request-deceased-persons-information
https://www.irs.gov/individuals/file-an-estate-tax-income-tax-return
https://www.irs.gov/individuals/file-the-final-income-tax-returns-of-a-deceased-person
https://www.irs.gov/individuals/responsibilities-of-an-estate-administrator
https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns
https://www.irs.gov/irm/part4/irm_04-012-001
