The IRS Can Force You To Pay Someone Else’s Taxes

The IRS can impose transferee liability.Transferee liability means that the IRS can collect someone else’s taxes fromyou. Joseph Mangiardi died in 2000. His daughter Maureen was co-executor of hisestate. She filed a tax return for the estate and found that the IRS was owed$2.5 million dollars. The estate had plenty of value so there should have beenno issue with the estate taxes. At the time, the stock value was low so theexecutors asked the IRS for more time. The IRS granted the extension.

However, instead of waiting for the pricesto go up, executors began trading stock. As a result, the executors lost allthe money and the tax debt increased to $3 million. The IRS then went after aretirement account that had already been distributed to the heirs. Maureen’sshare was $416 thousand dollars and the court granted the tax lien stating thatthe IRS lien was good for ten years. Additionally, the tax code createdpersonal liability.

See Robert W. Wood Worse Than PayingTaxes? Paying Someone Else’s-And IRS Can Make You Do It, Forbes,  Aug. 9, 2013.