Title 26 — Internal Revenue CodeRelease 119-73not60

§7341 Penalty for Sales to Evade Tax

Title 26 › Subtitle Subtitle F— Procedure and Administration › Chapter 75— CRIMES, OTHER OFFENSES, AND FORFEITURES › Subchapter D— Miscellaneous Penalty and Forfeiture Provisions › § 7341

Last updated Apr 5, 2026|Official source

Summary

If a person who owes a tax sells property before paying that tax to avoid the tax or to cheat the tax system, any debt or security from that sale is void and cannot be collected unless it was honestly passed to someone who bought it in good faith. Any money already paid for the property is lost. A person who sues to get that lost money back can recover it from the seller, with one-half going to the suing person and one-half to the United States.

Full Legal Text

Title 26, §7341

Internal Revenue Code — Source: USLM XML via OLRC

(a)Whenever any person who is liable to pay any tax imposed by this title upon, for, or in respect of, any property sells or causes or allows the same to be sold before such tax is paid, with intent to avoid such tax, or in fraud of the internal revenue laws, any debt contracted in such sale, and any security given therefor, unless the same shall have been bona fide transferred to an innocent holder, shall be void, and the collection thereof shall not be enforced in any court.

(b)If such property has been paid for, in whole or in part, the sum so paid shall be deemed forfeited.

(c)Any person who shall sue for the sum so paid (in an action of debt) shall recover from the seller the amount so paid, one-half to his own use and the other half to the use of the United States.

Reference

Citations & Metadata

Citation

26 U.S.C. § 7341

Title 26 — Internal Revenue Code

Last Updated

Apr 5, 2026

Release point: 119-73not60