En esta noticia
Receiving an inheritance in the United States does not mean that the assets can be distributed immediately among the beneficiaries. Before doing so, it is necessary to check whether the deceased person left outstanding debts, including federal taxes.
The Internal Revenue Service (IRS) states through Publication 559 that the federal government can claim assets from an estate to recover unpaid tax obligations.
How can the Government seize the assets of an inheritance?
The Government can take action on the assets of an estate through different collection procedures when there are unpaid taxes.
The main mechanisms are:
- Tax debt claim: the IRS can demand that the estate representative pay the outstanding taxes of the deceased person or of the estate itself.
- Federal tax lien: this is the Government’s legal right over the taxpayer’s assets, serving as security for payment of a tax debt. It can make it difficult to sell or transfer the affected properties.
- Tax levy: allows the IRS to legally seize assets or rights to assets subject to collection in order to recover unpaid taxes.
To reach this last mechanism, the IRS must determine the debt, demand payment and send a Final Notice of Intent to Levy (CP504 notice), along with information so that the affected person can request a hearing. Once the notice is issued, at least 30 days must pass before the measure is carried out.
In which two cases can the IRS claim and seize?
The IRS can claim and intervene in assets linked to an inheritance when there are outstanding tax debts. However, the procedure will depend on who is responsible for these obligations:
- Tax debts of the deceased person or of the estate
- Si el titular de los bienes murió sin pagar impuestos federales, IRS puede reclamar el dinero adeudado a la sucesión.
- También puede intervenir cuando el propio patrimonio genera obligaciones fiscales que no fueron pagadas.
- Tax debts of the beneficiary
- Si la persona que recibe la herencia tiene impuestos federales pendientes, IRS puede embargar los bienes o derechos hereditarios que legalmente le pertenezcan para recuperar la deuda.
In the first case, the debts must be settled before distributing the assets among the heirs, and in the second, it is not necessary since it only applies to the portion corresponding to the beneficiary.
Which inheritance assets can the Government claim?
The IRS can claim different types of assets belonging to the deceased person or the estate, as long as they are legally subject to tax collection. Among them are:
- Real estate: houses, apartments, lots and other properties.
- Money: cash and funds deposited in bank accounts.
- Investments: stocks, bonds and other financial instruments.
- Personal property: cars, boats and other items of economic value.
- Estate income: rents and other funds generated by the estate after death.
What procedure must not be skipped before distributing an inheritance?
Before distributing the assets among the heirs, the estate administrator must verify, declare and pay the outstanding tax obligations of the deceased person and the estate.
According to Publication 559, this procedure may require:
- Identifying the assets and debts that make up the estate.
- Filing the deceased person’s final tax return using Form 1040 or 1040-SR, when applicable.
- Filing Form 1041 if the estate must report its own income.
- Determining whether a federal estate tax return must be filed using Form 706.
- Paying the tax obligations before distributing the assets, following the legal order of priority.
The IRS allows filing Form 5495, through which the administrator can request to be relieved of liability for certain federal taxes. Once the request is received, the agency has nine months to inform the amounts owed.
If the determined amounts are paid, or the IRS does not report a debt within that period, the administrator may be released from personal liability for future tax differences.