Beneficiaries Could Be Liable For Estate Tax

If the IRS fails to assert a tax deficiency against a transferor before the running of the statute of limitations against a transferor, the transferee may nevertheless be liable for estate, gift or generation-skipping transfer tax under the concept known as “transferee liability.” Section 6901(c) allows one year after the expiration of the limitation period against the transferors for the IRS to determine a liability against the transferees under ยง6324(b).

Fiduciaries may be personally liable for payment of transfer taxes under the transferee liability doctrine and beneficiaries may be liable as well.

Read the actual Memorandum Opinion in the Upchurch case.