Will My Family Owe Taxes to the State or Federal Government When I Die?

If you leave an estate with assets that are each more than $2,000 in value, your property will be distributed according to your state’s probate rules and several types of taxes may be collected prior to distribution. Generally, the family members are not individually responsible for taxes because the governing body collects from the “estate” as if it were you in abstention.

Estate taxes, gift taxes and transfer of assets taxes or fees may be charge to either your estate or heir. Up until the Farm Bill130 that was passed by Congress in 2013, IRS recommended that you keep your financial records until your period of limitations expired.

However, the little known or discussed addition to the IRS code that was slipped silently into a back corner of the Farm Bill131, the “period of limitations on personal income tax records” has been eliminated allowing the IRS to now track down relatives of people who may have died before your birth to pay their outstanding tax bills.

In April 2014, the Washington Post ran an investigative article citing one of over thousands of people who have been affected by this law.132 There have been more than 1,200 appeals by taxpayers regarding the action taken and only approximately 10% have won.

This is the single sentence that allows IRS to dig up 44-year old records of debts in order to get descendants of the person who left the bill unpaid: 

Public Law 110–246 Page 122 STAT. 1663 Sec. 14219 Sec. 14219 Elimination of statute of limitations applicable to collection of debt by administrative offset The ten year limitation is the rule that was eliminated: 

If estate taxes are due, the IRS has, by law, a tax lien on all estate assets. (Internal Revenue Code §6324) The IRS can seize money or property from the heirs and executors if the tax isn’t paid, for up to ten years after the estate tax is determined.

Now, IRS can seize money or property from the heirs and executors if the tax has not been paid to date. Furthermore, the IRS has the right to garnish your wages and snatch your tax refunds without notifying you in advance.

Records that support your tax returns and the tax returns themselves now need to be kept into infinity and passed down to your heirs. If you are notified by IRS that there are back taxes owed, do not ignore this notice.

Contact an Administrative Law Tax Attorney immediately and follow his advice to the letter.