Pay first, inherit second: Form 706-NA and the nine month deadline

Almost everything in this subject is arguable. Domicile is settled after the death by an examiner reading whatever paperwork was left behind. Situs is a question of how an asset gets characterized. Treaty relief, where a treaty exists, has to be claimed and defended. None of it comes with a date attached.

Form 706-NA does. It falls due nine months after the death, and the tax falls due the same day.

How the tax is calculated belongs to the article on the $60,000 threshold. This one is about the other half: what happens to the family between the death and the day the assets are released, and why those two dates sit much further apart than anyone expects.

The sequence is the part nobody sees coming. The tax is paid before the assets are handed over. Not afterward, not out of the sale proceeds, not once the estate is settled. Pay first, inherit second.

9 monthsIRC § 6075(a)9 monthsIRC § 6075(a)Nine months, and it used to be fifteen

Section 6075(a) of the Internal Revenue Code runs to a single line:

"Returns made under section 6018(a) (relating to estate taxes) shall be filed within 9 months after the date of the decedent's death."

Nine months from the date of death. Not from the day the family learns a US obligation exists, and not from the day the succession opens at home.

The deadline was fifteen months until 1970. Public Law 91-614 cut it to nine for deaths after 31 December of that year, and it has not moved since. The cut was 40%, it was made more than half a century ago, and nobody has revisited it.

The filing obligation is triggered when US-situs assets exceed $60,000 (section 6018(a)(2)), counting adjusted taxable gifts as well. That threshold is the other article's subject.

§ 20.6325-1(a)why the bank will not release§ 20.6325-1(a)why the bank will not releaseMonth 0: the account stops moving, and the custodian has it in writing

What follows is a composite, assembled from pieces of several matters. It is not a real family.

A non-domiciliary dies on 1 March. He leaves a US brokerage account holding US-listed shares worth $800,000 and an unmortgaged Miami apartment worth $1,200,000: $2,000,000 of US-situs property. There is no US will, no US probate, and no executor appointed in the United States. Two adult children live abroad. The surviving spouse is not a US citizen. His home country, like every country in Latin America, has no estate tax treaty with the United States.

The brokerage is notified and the account stops. Nobody can trade it or draw on it.

Families read that as obstruction. It is not. Treasury Regulation § 20.6325-1(a) tells the custodian what its only safe course is:

"banks, trust companies, or other custodians in actual or constructive possession of property, of such a decedent can insure avoidance of liability for taxes and penalties only by demanding and receiving transfer certificates before transfer of property of nonresident decedents."

Only by demanding and receiving transfer certificates. A bank that asks for that document is avoiding liability for the decedent's US estate tax, which is exactly what the regulation warns it is exposed to. Understanding the custodian's position is more useful than arguing with it.

The apartment is stuck too. Title cannot pass without an administration, and any buyer's title company will want the US tax position resolved before closing. By month 0 both assets that could fund the tax are out of reach, and the nine month clock is already running. Nobody in the family knows that yet.

§ 2203executor by operation of law§ 2203executor by operation of lawMonth 1: someone is the executor whether or not anyone appointed one

The Form 706-NA instructions define the executor this way:

"If no executor is appointed, qualified, and acting in the United States, every person in actual or constructive possession of any of the decedent's property is considered an executor and must file a return."

The daughter in Bogotá or Guadalajara who has her father's account statements is an executor as a matter of US federal law. Nobody named her. Section 2203 does it, and the IRS applies it. She has a filing obligation and has never heard of the form.

The IRS also will not take her word for it: "A statement by the executor(s) attesting to their status is insufficient." What it wants is a certified copy of the will or a court order. From a foreign court. Translated into English. Before the local succession proceeding has gone far enough to produce either one.

One point gets written backward more often than not: the estate pays, not the heirs. The estate is the debtor, and the executor signs the return under penalties of perjury. Heirs can end up paying out of their own funds, but through a different route, covered at the end of this piece.

1 Marchthe date everything has to be valued at1 Marchthe date everything has to be valued atMonth 3: the file, in English, and an appraisal that looks backward

The instructions call for a death certificate, a certified copy of the will and any codicils, and one line that costs foreign families more than it looks like it should: "Attach an English translation to all documents in other languages."

The appraisal is the piece nobody starts in time. The instructions covering real estate require the executor to explain how the reported value was arrived at and to attach copies of any appraisals. That means engaging a US appraiser to value the apartment as of 1 March, retrospectively, months after the fact, and having the report in hand before month 9.

Then there is the taxpayer identification number. If the decedent had no social security number and no ITIN previously used on a US return, the instructions say the IRS will assign an Internal Revenue Service Number. Practitioners report that the way to start that process is to file the extension request early.

6 monthswhat Form 4768 actually buys6 monthswhat Form 4768 actually buysMonth 6: an extension of time to file is not an extension of time to pay

Form 4768 grants an automatic six month extension of time to file. No explanation is required. It only has to be filed by the original due date. It is genuinely automatic, and it does nothing for cash flow.

Section 6151(a) fixes the payment date with a parenthetical that closes the door:

"at the time and place fixed for filing the return (determined without regard to any extension of time for filing the return)."

The tax is due on the original date, calculated as though no filing extension existed. The IRS puts it in one sentence in the Form 4768 instructions: "An extension of time to file doesn't extend the time to pay." Part IV of the form asks for the estimated tax and the balance due, so the extension cannot even be requested without stating what is owed.

There is a second and quite different extension, this one for payment, under section 6161. It is discretionary. Every operative verb in the section is "may." It is granted for reasonable cause, a year at a time, up to ten, and section 6165 lets the Treasury demand security. One of the reasonable cause examples in the Form 4768 instructions describes nearly every foreign estate with US assets: liquid assets located in several jurisdictions and not immediately subject to the executor's control.

Even when granted, it does not stop interest. Section 6601(b)(1) is explicit that the last date prescribed for payment is determined "without regard to any extension of time for payment." Whether it also suspends the § 6651(a)(2) failure-to-pay penalty is a question to put to the estate's tax counsel. On interest there is no ambiguity.

One further route exists, and the statute closes it on its face. Section 6166 lets an estate concentrated in a closely held business pay in up to ten annual installments, with a 2% rate under section 6601(j) on much of the deferred tax. The condition sits in the first line of § 6166(a)(1): the decedent must have been, at the date of death, "a citizen or resident of the United States." A non-domiciliary is neither. Same business, same liquidity problem, no installments, and no 2% rate either, since it attaches only to tax deferred under section 6166.

$732,800tax on a $2,000,000 US estate$732,800tax on a $2,000,000 US estateMonth 9: $732,800 in cash, in dollars, from abroad

On a $2,000,000 US-situs taxable estate the tax is $732,800: a tentative tax of $745,800 under the section 2001(c) schedule, less the $13,000 credit under section 2102(b)(1). The example assumes the simplest possible facts, with no treaty, no prior gifts, no section 2106 deductions, no marital or charitable deduction and no state tax.

That money has to reach the US Treasury in dollars. The instructions ask for electronic payment where possible and list EFTPS, a same-day wire, and a check payable to "United States Treasury." The return itself goes to a mailing address in Kansas City. A family with no US banking relationship has to move six or seven figures into the Treasury from abroad, on a deadline.

15%withheld on the gross price, not the gain15%withheld on the gross price, not the gainThe two assets that were going to pay the tax

Take the brokerage account first. If it was held jointly by both spouses, the instinct is that half of it was already hers. That is not how US estate tax works when the surviving spouse is not a citizen. Section 2056(d)(1)(B) switches off the half-interest rule in § 2040(b), and the Form 706-NA instructions allow the half only where the surviving spouse is a US citizen.

The default is therefore 100% of the account in the deceased spouse's US gross estate. To bring that number down, the widow has to prove what she contributed, from her own funds, with records, in English. It is a documentary burden about money that may have been pooled for thirty years.

Now the apartment. Suppose the family decides to sell it and pay. Section 1445(a) requires the buyer to withhold 15% of the amount realized when the seller is a foreign person. Not 15% of the gain: 15% of the gross price. The amount withheld is a deposit against income tax, recoverable later by filing a US return.

So the asset sold to fund a tax due in month 9 delivers 85 cents on the dollar, and delivers it late. And the sale can only close if an administration was opened first so that title can pass.

$141interest per day on $732,800$141interest per day on $732,800Month 15: what the delay costs

The failure-to-file penalty is 5% of the tax per month or part month, capped at 25%, and a valid extension defers it. The failure-to-pay penalty is 0.5% a month, capped at the same 25%, and nothing on the filing side defers it. Where both run in the same month, section 6651(c)(1) subtracts the second from the first.

Interest has no cap. Section 6621 sets it at the federal short-term rate plus 3 percentage points, reset every quarter, so the figure moves. For the quarter beginning 1 July 2026 the IRS published 7% for underpayments, and section 6622 requires it to be compounded daily. At that rate, $732,800 accrues roughly $141 a day.

The second row is the well-run version. The family did everything right and used the extension it was entitled to. Those six months cost about $48,000, roughly 6.6% of the tax, for a delay it may have had no way to avoid. The figures assume no section 6161 payment extension was granted. If matters run on, the combined ceiling on the two penalties is 47.5% of the tax, or $348,080, a figure derived from reading sections 6651(a)(1), (a)(2) and (c)(1) together rather than one the IRS publishes.

One procedural detail that rarely gets mentioned: reasonable cause is argued after the penalty notice arrives, not before. "Explanations attached to the return at the time of filing will not be considered."

0processing times the IRS publishes for Part A0processing times the IRS publishes for Part AMonth 18 and beyond: the transfer certificate

Paying does not release the assets. Regulation § 20.6325-1(c) makes the transfer certificate, commonly called Form 5173, conditional on the tax being fully discharged, and defines that as follows:

"only when investigation has been completed and payment of the tax, including any deficiency finally determined, has been made."

Investigation completed, and payment made, including any deficiency finally determined. Not before.

How long that takes has no published answer, and the distinction is worth getting exactly right. The IRS page describes two routes. Part B is for estates below the $60,000 threshold, which file no return and document everything with a notarized affidavit. At the end of Part B, and only there, the IRS publishes a processing time of 12 to 18 months. For Part A, the route an estate that filed Form 706-NA has to use, it publishes no timeframe at all. One comparison is published: the equivalent page for estates of nonresident US citizens carries the same sentence, the same procedure and the same fax number, with a different number in it, six to nine months.

Practitioners who do this work report waits running from several months to several years, and say status updates are hard to obtain. A UK international probate practice publishes a range of 15 to 24 months, attributed to pandemic backlog, on a page carrying no visible date. None of those figures is the IRS number for this route, because there is no IRS number for this route.

The regulation does contain an exception: no certificate is required for property administered by an executor appointed, qualified and acting within the United States. Practitioners report that institutions ask for one anyway, so it is not a foundation to build a plan on.

Two clocks keep running meanwhile. The closing letter cannot even be requested until nine months after filing, which puts month 18 at the earliest for a return filed on time. And section 6324(a)(1) keeps a federal estate tax lien on the gross estate for ten years from the date of death, paid or not.

3layers of personal liability3layers of personal liabilityWho pays out of their own pocket

The third row explains the first two. The custodian will not release because it is on the hook. Because it will not release, the family has nothing to pay with. Because it has nothing to pay with, the executor distributes whatever she can reach, which is usually the property outside the United States. That distribution is what triggers 31 U.S.C. § 3713(b), a provision that sits not in the tax code but in the title on money and finance, and that reaches a representative who has never set foot in the country.

The system is internally consistent. It was simply built without a family living somewhere else in mind.

What can be done while there is time to do it

Nine months, and the date does not move. The extension that is easy to get is for filing, not for paying. Interest runs from the original date in every scenario. Section 6166 installments are closed by the text of the statute. And the two assets that would fund the tax are frozen by the same process that determines it, for a period the IRS does not publish.

None of that can be fixed afterward. Most of it can be arranged beforehand, and it comes down to four things:

• Ask your bank or brokerage, in writing, what it will require on the death of a nonresident account holder. The answer almost always names the transfer certificate, and having it in writing now saves a pointless argument later.
• Check how each account is titled. If there is a joint account with a non-citizen spouse, find out whether the records that would prove her contributions still exist. If they do not, the starting point is 100%.
• Assemble the file the IRS will ask for: a certified copy of the will, who the executor will be and what document establishes it, and which translations will be needed.
• Run the tax at today's values and answer one question. Where does that cash come from, in dollars, at month 9, without touching the frozen assets? If the answer is a sale, test it against the 15% withholding.

That is where life insurance has a narrow and honest role, and it is worth stating without inflating it. Section 2105(a) provides that the amount receivable as insurance on the life of a nonresident non-citizen decedent is not US-situs property, so the death benefit is neither taxed in the US estate nor caught in the freeze. It does not change the tax and it does not speed up the certificate. What it does is put cash in the family's hands on a timetable that matches month 9, which is what the two US assets cannot do.

That list is a few weeks of administrative work now. It is the same list the family will otherwise work through later, in a second language, against a due date.

This article is general information for educational purposes. It is not legal or tax advice, and it is not an offer. Every situation turns on its own facts: review yours with your attorney and your accountant.