Transferee Liability

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Transferee liability is a procedure that lets the IRS collect taxes, interest and penalties from you when you receive assets from someone else, or if you are legally responsible for paying the liability of the person or entity who transferred the assets to you. (See Internal Revenue Code Section 6901, Transferred Assets.)

For example, say you’re the beneficiary of your brother’s estate. Your brother left you a bank account. If your brother’s estate did not pay the estate tax due, or did not pay other taxes owed by your brother, you can be held personally liable for those taxes because you received an asset of his estate. The same is true if you’re the personal representative for the estate.

Under transferee liability, as the person who received the assets (the “transferee”), you’re subject to the same methods of collection that would have been applied to the “transferor” (the estate in the above example).

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