Beneficiaries Hit with Transferee Liability Suit for Estate Taxes 19 Years After Date of Death

In the case of U.S. v. Ringling, 123 AFTR2d 2019-XXXX (DC SD 2/21/19), the circumstances shed light on the fact that beneficiaries and recipients of property from a decedent do not receive the property free and clear from estate tax liabilities. Under Code §6324(a)(2), the Internal Revenue Service can seek to collect these taxes, even if it has been many years.

The statute of limitations is 10 years from the date the assessment of tax is made against the estate. Here, the IRS filed suit in the 9th year of that 10 year period (and 19 years after the date of death). And it does not have to be an exuberant amount for the IRS to come after the beneficiaries after such a period of time, either. In the present case, the unpaid tax was $28,939 (but with interest and penalties the amount sought was $65,874.80.

See Charles Rubin, Beneficiaries Hit with Transferee Liability Suit for Estate Taxes 19 Years After Date of Death, Rubin on Tax, March 3, 2019.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.