No, I’m not suggesting how you should comport yourself “if you ever go to Houston.” I just did, and neither staggered nor fought. I would not want to incur the obloquy of my nearest and dearest, among whom, I have discovered, is a ukulele virtuoso.
Rather, this is about the special tax lien that attaches to all property of a decedent eo instante she or he becomes a decedent, more particularly bounded and described in Section 6324(a)(1).
In Estate of Ruben A. Myers, Deceased, Ken Norton, Executor, 2017 T. C. Memo. 11, filed 1/10/17, ex’r complains that IRS slugged the estate with a NFTL and a NITL, after he urged IRS to go after nonprobate assets in the hands of persons beyond his control, and the SO at Appeals agreed.
The RO on the case apparently was guilty of certain missteps, but that doesn’t affect the outcome.
Ex’r said he’d have to sell the farm at a loss, he didn’t have money, and he couldn’t touch the nonprobate assets. So IRS should’ve hit the nonprobate assets with a NFTL. And since the SOL (10 years) ran before IRS did anything, IRS abused its discretion.
Judge James S. (“Big Jim”) Halpern is on the case, and he puts the ex’r right.
“We first observe that petitioner misunderstands section 6324. Unlike the general tax lien provided for in section 6321, which was the subject of the NFTL and which attaches to all property belonging to a taxpayer after assessment, demand, and nonpayment of the tax and which secures the payment of all types of Federal taxes, including estate taxes, the special estate tax lien comes into being without assessment or notice and demand automatically on the date of death, and it attaches to all of the property the value of which is included in the gross estate whether or not the property comes into the possession of the executor or administrator. It continues for 10 years unless, before the end of the 10-year period, the estate tax is paid in full or becomes unenforceable by expiration of the period of limitations on collection. See sec. 6324(a)(1). Petitioner’s claim that respondent abused his discretion by failing to file a special estate tax lien against the nonprobate assets the value of which was included in decedent’s gross estate is without merit, since that lien came into existence upon decedent’s death without the necessity of respondent’s doing anything.” 2017 T. C. Memo. 11, at pp. 13-14.
So? For nine years plus IRS did nothing as regards the nonprobate assets. Then, when the estate coffers were bare, IRS woke up and hit the estate as aforesaid. Ex’r petitions, staying collection, with three (count ‘em, three) months to go before the SOL clock runs out.
Of course, with collection stayed and the SOL clock running all the while, the special lien, in the words of American National Treasure Charles Edward Anderson (“Chuck”) Berry, is “gone like the cool breeze.”
Judge Big Jim cares not. “We are left only to consider that, as the parties have stipulated, the section 6324 special estate tax lien encumbering the nonprobate assets included in the gross estate expired on November 15, 2015, and respondent has not taken any action to attach or otherwise pursue collection of the estate tax liability with respect to nonprobate assets. Those are events occurring after Appeals issued the determination on July 1, 2015. And while pursuant to our authority under section 6330(d) to review CDP determinations we may take into account changed circumstances, see Churchill v. Commissioner, T.C. Memo. 2011-182, 2011 WL 3300235, at *6 (‘[W]e do have authority to remand a CDP case for consideration of changed circumstances when remand would be helpful, necessary, or productive.’), petitioner has not convinced us that a remand would be helpful, necessary, or productive. Respondent explains that, pursuant to his collection procedures, he froze collection actions three months before the special estate tax lien lapsed when, on August 17, 2015, petitioner filed the petition. See Internal Revenue Manual (IRM) pt. 184.108.40.206.5.1 (June 24, 2014) (stating that levy actions are suspended on filing of timely CDP notice). ‘In other words,’ argues respondent, ‘[he] agreed to petitioner’s request to pursue non-probate assets, but petitioner’s actions prevented the collection action from going forward.’” 2017 T. C. Memo. 11, at pp. 16-17.
Sure, like IRS was going to start to grab the nonprobate assets after nine years and nine months of doing nothing, but the nasty ex’r, with only thirty days to petition the NOD, interfered?
Give me a break.
Well, of course Tax Court can’t start a wide-ranging excursus into what IRS could’a would’a should’a done. No abuse of discretion. IRS wins.
But Judge Big Jim has a hint for IRS, which has hardly covered itself with glory here.
“Before we close, we point out that there may still be ways for respondent to collect the estate tax liability from third parties. For example, the period of limitations applicable to the personal liability imposed on transferees and others by section 6324(a)(2) is not the 10-year period from the date of death provided in section 6324(a)(1). It is the 10-year collection period provided in section 6502(a) running from the date of assessment. See United States v. Bevan, No. 2:07-cv- 1944 MCE JFM PS, 2008 WL 5179099, at *6 (E.D. Cal. Dec. 10, 2008); United States v. Degroft, 539 F. Supp. 42, 44 (D. Md. 1981). We do not know the date the estate tax was assessed, but the parties have stipulated that the estate tax return was filed February 15, 2007, a date that almost certainly was before the date the estate tax was assessed. The 10-year period for imposing personal liability is probably still open.” 2017 T. C. Memo. 11, at p. 18.
As we said in my young day, get with the program.