Academic journal article Journal of Accountancy

Post-Mortem Tax Lien Is Valid

Academic journal article Journal of Accountancy

Post-Mortem Tax Lien Is Valid

Article excerpt

The IRS may recover a 100% IRC [section] 6672 trust fund penalty from any responsible person who acts willfully in failing to pay over to the government taxes withheld from employees. If the responsible person dies after the assessment but before the penalty is paid, the Tax Court held, a notice of federal tax lien filed shortly after the taxpayer's death is valid.

In August 2004, the IRS issued the taxpayer, Mark Brandon, a proposed assessment regarding section 6672 penalties for unpaid trust fund taxes withheld in 2003. On Oct. 6, 2004, Brandon filed a protest in response to the proposed assessment, but since no agreement was reached between the two parties, the case was closed as an unagreed case on Jan. 31, 2006. On Feb. 27, 2006, the Service assessed the trust fund penalty against Brandon.

Two months later, on April 27, 2006, Brandon died in a motorcycle accident. In his will, Brandon named his wife the executrix, and in October 2006 the estate informed the IRS of Brandong death. Then, on Nov. 2, 2006, the Service issued a notice of federal tax lien (NFTL). The estate timely submitted a request for a collection due process hearing, in which the validity of the NFTL was disputed.

The estate contended that as of Brandong date of death, the title to all his property passed to his estate, which was not named in the lien. Therefore, the estate claimed, the NFTL was invalid because it named only Brandon individually The protest further contended that Brandon had no property interests when the NFTL was issued in November 2006. …

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