Tag Archive for Nominee Liability

The IRS And Nominee Liability

The IRS And Nominee Liability

Nominee Liability

Under the Internal Revenue Code, the IRS can satisfy a tax deficiency by imposing a lien on any “property” or “rights to property” belonging to the taxpayer.  The statutory language is broad and reaches virtually every interest in property that a taxpayer might have, with limited exceptions.  In fact, the IRS’s legal ability to reach “property” and “rights to property” can include not only property and rights to property owned by the taxpayer in the taxpayer’s name, but also property held by a third party if the third party is holding the property as a nominee of the delinquent taxpayer.

What is a nominee?

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Written by | Posted in IRS • Nominee Liability

The IRS, Fraudulent Transfers, And Transferee Liability

The IRS, Fraudulent Transfers, And Transferee Liability

Can you be held liable for a tax liability owed by another taxpayer?

Yes, under certain circumstances.  The IRS  uses fraudulent transfer law and “transferee” liability tools to collect unpaid taxes where a taxpayer has transferred property to a third party.  The third party, known as a “transferee” or “nominee,” may be liable to the IRS based on several legal theories, such as transferee liability, nominee liability, alter ego liability and other mechanisms.  This article provides a comprehensive overview of IRS third-party liability.

Third-Party Liability

Under federal tax law, a third party can be held liable for the tax liability of another person.  The IRS often uses the following legal theories to hold a third party liable for taxes that are owed by another person:

  • Transferee Liability
  • Fiduciary Liability
  • Successor-in-Interest Liability
  • Nominee Liability
  • Alter Ego Liability

When invoking these legal theories, the IRS often alleges fraud.  Thus, taxpayers and third parties in this context typically face a higher risk of civil fraud penalties or criminal prosecution.

Levies and Seizures

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Written by | Posted in Statue Of Limitations For Fraudulent Transfer Suit • Transfer Of Assets