Jerald David August presented "When A Tax Goes Unpaid: Understanding Fiduciary and Transferee Liability" at the American Law Institute

Unbeknownst to many beneficiaries and fiduciaries, when a tax goes unpaid by a decedent, the IRS can hold donees, fiduciaries, or transferees personally liable for the amount owed. 

If a taxpayer, including an estate, fails to pay federal income, gift, or estate taxes in full, the IRS has the authority to collect from the executor or fiduciary of the taxpayer’s estate or from a transferee of taxpayer’s property – even if the amount of the tax exceeds the value of the property at the date of transfer. Too often, trust and estate clients fail to understand their potential personal liability for a decedent’s/grantor’s unpaid taxes until it is too late.

Topics included:

  • When the IRS may hold a donee or beneficiary of an estate personally liable for the unpaid taxes of the donor/decedent
  • Special tax liens under 26 U.S.C. Section 6324 for unpaid gift and estate taxes on property received from the donor/decedent
  • The importance of Federal and state law on fraudulent conveyances in a transferee or fiduciary liability case
  • Fiduciary liability in a business organization context