26 U.S.C. § 6901: Transferred assets

Summary

People who get property from someone who owes taxes can be held responsible for that tax. The IRS collects what those people owe the same way it would collect the original tax. This rule covers income, estate, and gift taxes and some other taxes when the transfer happens because a partnership or corporation ends or in certain reorganizations. The people who can be held responsible include donees, heirs, legatees, devisees, distributees, and, for estate taxes, anyone who is personally liable. It also covers people who manage an estate (fiduciaries). The liability can be for the tax shown on a return or for any underpayment or deficiency. There are time limits for the IRS to charge a transferee or fiduciary. An initial transferee must be charged within 1 year after the time to assess the tax against the person who transferred the property ends. A transferee of a transferee must be charged within 1 year after the prior transferee’s time ends, but no more than 3 years after the initial transferor’s time ends. Fiduciaries must be charged no later than 1 year after their liability starts or by the time to collect the original tax, whichever is later. The time can be extended if the person and the IRS agree in writing before the time runs out. The time limit pauses while the IRS is barred from assessing or while a court case is pending, and then for 60 days after. If the IRS has not been told about a fiduciary, mailing notice to the person’s last known address is enough even if they are dead or the company ended. Extra time rules for military service in combat zones also apply.

Title 26, §6901

Internal Revenue Code, Source: USLM XML via OLRC

(a)Method of collection

The amounts of the following liabilities shall, except as hereinafter in this section provided, be assessed, paid, and collected in the same manner and subject to the same provisions and limitations as in the case of the taxes with respect to which the liabilities were incurred:

(1)Income, estate, and gift taxes

(A)Transferees

The liability, at law or in equity, of a transferee of property—

(i)of a taxpayer in the case of a tax imposed by subtitle A (relating to income taxes),

(ii)of a decedent in the case of a tax imposed by chapter 11 (relating to estate taxes), or

(iii)of a donor in the case of a tax imposed by chapter 12 (relating to gift taxes),

in respect of the tax imposed by subtitle A or B.

(B)Fiduciaries

The liability of a fiduciary under section 3713(b) of title 31, United States Code, in respect of the payment of any tax described in subparagraph (A) from the estate of the taxpayer, the decedent, or the donor, as the case may be.

(2)Other taxes

The liability, at law or in equity of a transferee of property of any person liable in respect of any tax imposed by this title (other than a tax imposed by subtitle A or B), but only if such liability arises on the liquidation of a partnership or corporation, or on a reorganization within the meaning of section 368(a).

(b)Liability

Any liability referred to in subsection (a) may be either as to the amount of tax shown on a return or as to any deficiency or underpayment of any tax.

(c)Period of limitations

The period of limitations for assessment of any such liability of a transferee or a fiduciary shall be as follows:

(1)Initial transferee

In the case of the liability of an initial transferee, within 1 year after the expiration of the period of limitation for assessment against the transferor;

(2)Transferee of transferee

In the case of the liability of a transferee of a transferee, within 1 year after the expiration of the period of limitation for assessment against the preceding transferee, but not more than 3 years after the expiration of the period of limitation for assessment against the initial transferor;

except that if, before the expiration of the period of limitation for the assessment of the liability of the transferee, a court proceeding for the collection of the tax or liability in respect thereof has been begun against the initial transferor or the last preceding transferee, respectively, then the period of limitation for assessment of the liability of the transferee shall expire 1 year after the return of execution in the court proceeding.

(3)Fiduciary

In the case of the liability of a fiduciary, not later than 1 year after the liability arises or not later than the expiration of the period for collection of the tax in respect of which such liability arises, whichever is the later.

(d)Extension by agreement

(1)Extension of time for assessment

If before the expiration of the time prescribed in subsection (c) for the assessment of the liability, the Secretary and the transferee or fiduciary have both consented in writing to its assessment after such time, the liability may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. For the purpose of determining the period of limitation on credit or refund to the transferee or fiduciary of overpayments of tax made by such transferee or fiduciary or overpayments of tax made by the transferor of which the transferee or fiduciary is legally entitled to credit or refund, such agreement and any extension thereof shall be deemed an agreement and extension thereof referred to in section 6511(c).

(2)Extension of time for credit or refund

If the agreement is executed after the expiration of the period of limitation for assessment against the taxpayer with reference to whom the liability of such transferee or fiduciary arises, then in applying the limitations under section 6511(c) on the amount of the credit or refund, the periods specified in section 6511(b)(2) shall be increased by the period from the date of such expiration to the date of the agreement.

(e)Period for assessment against transferor (f) Suspension of running of period of limitations

For purposes of this section, if any person is deceased, or is a corporation which has terminated its existence, the period of limitation for assessment against such person shall be the period that would be in effect had death or termination of existence not occurred.

(g)Address for notice of liability

In the absence of notice to the Secretary under section 6903 of the existence of a fiduciary relationship, any notice of liability enforceable under this section required to be mailed to such person, shall, if mailed to the person subject to the liability at his last known address, be sufficient for purposes of this title, even if such person is deceased, or is under a legal disability, or, in the case of a corporation, has terminated its existence.

(h)Definition of transferee

As used in this section, the term “transferee” includes donee, heir, legatee, devisee, and distributee, and with respect to estate taxes, also includes any person who, under section 6324(a)(2), is personally liable for any part of such tax.

(i)Extension of time

For extensions of time by reason of armed service in a combat zone, see section 7508.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Subsec. (a)(1)(B). Pub. L. 115–141 substituted “Code, in” for “Code in”. 1982—Subsec. (a)(1)(B). Pub. L. 97–258 substituted “section 3713(b) of title 31, United States Code” for “section 3467 of the Revised Statutes (31 U.S.C. 192)”. 1976—Pub. L. 94–455 struck out “or his delegate” after “Secretary” wherever appearing.

§6901 Transferred Assets

Summary

Title 26, §6901

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata