The "Mailbox Rule" is no more

The IRS considers a paper tax return filed on the date that the return is deposited in the mail (properly addressed and postage paid). This is the “Mailbox Rule.” Historically, mail was postmarked on the date that the return was dropped in the mailbox, so the date of mailing was easily verified. On November 24, 2025, the U.S. Postal Service finalized a rule clarifying how and when postmarks are applied. Under modern USPS processing, many mail pieces are now postmarked at regional processing facilities, not at the local post office. So now your postmarked date may be later than the date deposited in the mailbox. If the filing date is material, then in order to verify mailing date, certified mail is recommended.

Death Tax Repeal Act?

The “Death Tax Repeal Act” was recently introduced in Congress and seeks to eliminate the federal estate and generation-skipping transfer taxes. The Act would also lower the gift tax rate to 35% while retaining the gift tax exemption of $13.99 million in 2025, adjusted for inflation in later years. There appears to be strong Congressional support for the Act. If the Act does pass and you have implemented strategies to minimize estate taxes, then your estate tax planning strategies and documents should be reviewed. Tax planning should still be considered, even if the estate tax is “permanently” eliminated, as the federal estate tax could easily be reinstated.

The Act does not change the rules related to the gift tax annual exclusion or the income tax rules for determining tax basis on gifts (carryover basis) or on transfers upon death (fair market value). In other words, if an individual dies owning appreciated assets, under the Act those assets would continue to receive a full “step up” in basis to fair market value.

The Congressional Budget Committee has estimated that the Act would reduce federal revenue by approximately $269 billion over a decade (federal estate and gift taxes have been about 1% of federal revenue since 2015). Assuming the Act becomes law, a later Congress has the ability to bring back the estate tax in the same manner as the current members of Congress may repeal the estate tax. So it would be prudent to determine the effect the Act may have on current estate plans, but continue to maintain or adopt estate tax planning strategies to minimize tax if and when the whims of Congress swing the pendulum back to enacting an estate tax. The eventual reinstatement of the estate tax seems inevitable, but time will tell.

There is no assurance that a reinstated estate tax will have the same exemptions, tax rates or other existing attributes. For example, under current law a surviving spouse may make a tax election to retain and use a deceased spouse’s estate tax exemption. Upon enactment of the Act, that election will be gone, since no estate tax exists. The reinstatement of the election may or may not be included in future laws.

If your spouse is not a U.S. citizen, then your estate plan may include a Qualified Domestic Trust (QDOT). A QDOT may allow for deferral of estate tax. Generally no estate tax is due on QDOT assets until distributions are made, and distributions are taxed as if part of the original estate. Under the Act, for a QDOT created before the effective date, QDOT distributions will still be taxed for a 10 year period after the effective date of the Act.