Code Sec. 6324 | Tax Court Allows IRS to Collect Estate’s Unpaid Estate Tax | Estate of Ruben A. Myers v. Commissioner, T.C. Memo. 2017-11

The Tax Court, in The  Estate of Ruben A. Myers v. Commissioner, T.C. Memo. 2017-11, sustained the Service’s determination to proceed with lien and levy actions to collect an estate’s unpaid taxes, finding that the estate’s claim that the Service abused its discretion by not filing a special estate tax lien under Code Sec. 6324 against nonprobate assets was meritless because the lien automatically arose upon the decedent’s death.

The abstract is as follows:

P asks us to review a determination by IRS Appeals sustaining a lien notice and a notice of proposed levy to collect delinquent installment payments of estate tax. The gravamen of P’s complaint is that R abused his discretion during the 10-year period before the delinquency by not pursuing collection from nonprobate assets not under P’s control. Following the CDP hearing, the settlement officer prioritized collection actions first against nonprobate assets and certain jointly owned probate property. P misunderstands the I.R.C. sec. 6324(a)(1) special estate tax lien, which attaches automatically on the date of death to the gross estate without any action by R and which lapses in 10 years. P also misunderstands the scope of our review under I.R.C. sec. 6330(d). We do not conduct broad-ranging inquiry into the means by which R has sought to collect estate tax over the years since decedent’s death. Our narrow focus is on whether the settlement officer abused his discretion in sustaining the filing of the lien notice and the proposed levy notice. Moreover, we will not remand this case for consideration of changed circumstances because the 10-year duration of the special estate tax lien lapsed during the pendency of this case after R froze collection actions on the filing of the petition. Although the special estate tax lien has lapsed, the period for asserting I.R.C. sec. 6324(a)(2) transferee liability may be open.
Held: IRS Appeals’ determination is sustained.

See full case at Estate of Ruben A. Myers, Deceased, Ken Norton, Executor.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.