Jan192026
Probate Q&A Series

What tax return(s) need to be filed for an estate after we receive IRS letters or notices? – North Carolina

Short Answer

In North Carolina, an IRS letter or notice does not automatically mean an estate tax return is due, but it often signals that a return is missing, incomplete, or needs a response. Most estates deal with (1) the decedent’s final personal income tax return and (2) the estate’s fiduciary income tax return if the estate earned income after death. A federal estate tax return is required only in higher-value estates or when certain elections are being made, and North Carolina no longer has a state estate tax for deaths on or after January 1, 2013.

Understanding the Problem

In North Carolina estate administration, the personal representative may receive IRS letters or notices addressed to the decedent or the estate. The practical question is: after those IRS documents arrive, what tax return or response must be filed, by whom, and on what timeline, so the estate can move toward closing while the creditor-claim period is nearing its end.

Apply the Law

North Carolina generally follows the federal framework for when an estate must file an income tax return. If the estate has taxable income and is required to file under federal rules, the fiduciary must also file a North Carolina fiduciary income tax return. Separately, the personal representative may have to file the decedent’s final North Carolina individual return if the decedent had a filing requirement. IRS notices often relate to one of these filings (or to a mismatch in reported income), and the correct next step depends on what the notice is asking for and which taxpayer (decedent vs. estate) the IRS is contacting.

Key Requirements

  • Identify the taxpayer named in the notice: IRS mail may be for the decedent (final personal return issues) or for the estate (fiduciary return issues). The response and signature authority depend on who the IRS says the taxpayer is.
  • Determine which return type is implicated: Common filings are the decedent’s final federal/state personal income tax returns, the estate’s fiduciary income tax returns, and (less commonly) a federal estate tax return for higher-value estates or certain elections.
  • File on the correct tax year and deadline: North Carolina fiduciary income tax returns generally follow a calendar-year or fiscal-year deadline structure, and missing a response deadline on an IRS notice can create avoidable penalties or delays.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, counsel is reviewing IRS documents received during administration while the estate is nearing the end of the creditor-claim period. The first step is sorting the IRS letters by (1) who the IRS says the taxpayer is (decedent vs. estate) and (2) what period the IRS is addressing (a year before death, the year of death, or a period after death). If the estate earned income after death (for example, interest, dividends, or sale proceeds that create taxable income), the estate may need fiduciary income tax filings in addition to the decedent’s final personal filings; if the notice concerns missing income documents, the response may be an amended return or a written explanation rather than a brand-new return.

Process & Timing

  1. Who files: The personal representative (often through counsel and an accountant). Where: IRS (for federal filings/responses) and the North Carolina Department of Revenue (for North Carolina filings). What: Typically (a) the decedent’s final personal income tax returns (federal and North Carolina) and/or (b) the estate’s fiduciary income tax returns (federal and North Carolina), plus a written response to the specific IRS notice. When: Follow the deadline printed on the IRS notice for responses; for North Carolina fiduciary income tax returns, calendar-year returns are generally due by April 15 and fiscal-year returns by the 15th day of the fourth month after the fiscal year ends.
  2. Match the notice to the return: If the IRS notice references a specific tax year and a specific form, confirm whether that return was filed, whether it was filed under the correct taxpayer identification number, and whether the IRS is asking for payment, documentation, or corrections.
  3. Coordinate with estate closing steps: Before final distributions and closing filings, confirm that known tax filings are complete (or that extensions/response deadlines are being met) so the estate does not close with unresolved tax correspondence.

Exceptions & Pitfalls

  • Not every IRS letter means a new return is required: Some notices request identity verification, supporting documents, or clarification about income items rather than a separate estate return.
  • Confusing the decedent and the estate: A common mistake is responding as the wrong taxpayer (for example, treating a decedent’s final-year issue as an estate issue), which can delay resolution.
  • Overlooking the estate’s post-death income: Even when the decedent’s final return is handled, estates that earn income during administration may still need fiduciary income tax filings.
  • Assuming North Carolina estate tax filings apply: North Carolina’s estate tax is repealed for decedents dying on or after January 1, 2013, so many estates will not have a North Carolina estate tax return—though federal estate tax rules can still apply in higher-value estates.

For more background on how these filings commonly fit together, see estate income tax return considerations and how IRS issues get handled during probate in North Carolina.

Conclusion

In North Carolina, IRS letters or notices usually point to a needed response tied to either the decedent’s final personal income tax returns or the estate’s fiduciary income tax returns for income earned after death. The personal representative should first identify whether the IRS is contacting the decedent or the estate, then match the notice to the correct tax year and return type. As a next step, prepare and file the required fiduciary return (if the estate has taxable income and a federal fiduciary return is required) and respond to the IRS by the notice deadline.

Talk to a Probate Attorney

If an estate is receiving IRS letters or notices and it is unclear which return must be filed (or whether a written response is enough), our firm has experienced attorneys who can help clarify the filings, coordinate with the tax preparer, and protect the estate’s timeline for closing. Call us today at [CONTACT NUMBER].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.