Transferee Liability, written by Theodore D. Peyser, Esq., of Roberts & Holland, analyzes the application of §6901 and related judicial interpretations. Beginning with a general discussion of transferee liability and its development from the so-called trust fund doctrine, the Portfolio distinguishes between transferee liability in equity and liability at law.
The question as to whether the transferee is liable at law or equity for the tax of the transferor is governed by state law; however, questions as to the liability of the transferor are determined under the Internal Revenue Code.
Section 6901 does not create a separate liability for the transferee; instead, it merely provides for a secondary method of enforcing the liability of the transferor. In any event, the liability of various classes of transferees are distinguishable.
This Portfolio discusses the origin of the Internal Revenue Code provisions on Transferee Liability and provides an overview of Transferee Liability in general, its considerations, the requirements of transfer of property, and the liability of the transferor. It also discusses retransfers, examines transferee liability in equity, and identifies the elements of transferee liability in equity based on a fraudulent transfer.
In addition, this Portfolio
Transferee Liability allows you to benefit from:
This Portfolio is part of the U.S. Income Portfolios Library, a comprehensive series that includes more than 200 Portfolios, which covers every federal tax topic with expert, in-depth analysis, and offer commentary on a wide range of federal taxation topics, including Compensation Planning, Deductions and Credits, Partnerships and Corporations, Special Pass-Through Entities, Corporate Reorganizations, Real Estate, Procedure and Administration, and more.
Detailed Analysis
I. Introduction - Secondary and Derivative Liability for Taxes
A. The Origin of the Internal Revenue Code Provisions on Transferee Liability
B. Transferee Liability for Federal Taxes Without Reference to § 6901
1. Fraudulent Transfer
a. State Law
b. Federal Law - FDCPA
2. Trust Fund Doctrine
3. The Concept of Nominee or Alter Ego
4. Corporate Successors
5. Employment Taxes
a. Liability of Responsible Persons
b. Third-Party Liability
6. Fiduciary Liability
II. Transferee Liability in General
A. General Considerations
B. Requirement of a Transfer of Property
C. Liability of the Transferor
D. Retransfers
III. Transferee Liability in Equity
A. In General
B. Elements of Transferee Liability in Equity Based on a Fraudulent Transfer
1. Insolvency of the Transferor
a. In General
b. Insolvency Through a Series of Transfers
c. Determination of Insolvency
(1) Tests for Determining Insolvency
(2) Measuring Assets and Liabilities
2. Exhaustion of Remedies Against the Transferor
3. Lack of Adequate Consideration
IV. Transferee Liability at Law
A. Contractual Liability
1. In General
2. Contractual Assumption of Tax Liability
B. Statutory Liability
C. Estate and Gift Taxes
V. Classes of Transferees
A. Transferee Defined
B. Beneficial User of Transferred Property
C. Sale and Purchase of Corporate Stock or Assets
1. Stockholder-Distributees
b. Constructive Transfers
c. Liquidating Distributions
d. Acquisition of Stock
2. Sale of Stock
3. Purchase of Stock or Assets
D. Creditors and Borrowers
E. Fiduciaries
F. Heirs, Legatees and Devisees
G. Surviving Joint Tenants and Tenants by the Entirety
H. Life Insurance Beneficiaries
I. Pension Benefits
J. Partners and Partnerships
K. Transferee of Transferee
VI. The Extent of Transferee Liability
B. Extent of Transferee Liability in Equity
C. Extent of Transferee Liability at Law
D. Liability for Penalties and Interest Earned on Transferred Assets
1. Liability for Interest Where Value of Assets Transferred Exceeds Deficiency of Transferor
2. Liability for Interest Where Value of Assets Transferred is Less Than Deficiency of Transferor
3. Interest That Accrues After Sending of Notice of Transferee Liability to Transferee
VII. Defenses Against Transferee Liability
VIII. Procedures for Enforcing Transferee Liability
A. Section 6901 Assessment Procedure
2. Address for Notice of Liability
3. Statute of Limitations
b. Statute of Limitations for Transferees
(1) Initial Transferee
(2) Transferee of Transferee
(3) Limitations Period Where Court Proceeding Began Against Last Preceding Transferee
(4) Extension of Limitations Period by Agreement
(5) Death or Dissolution of Transferor
(6) Extension or Suspension of Limitations Period
c. Effect of Request for Prompt Assessment
B. Suits Bought by Transferees
1. Tax Court Review
2. Refund Suits
3. Injunctions Against Collection of Transferee Liability
C. Suits by the IRS
1. Statute of Limitations
2. Burden of Proof
IX. Effect of a Discharge in Bankruptcy
A. Discharge of the Transferor/Taxpayer
B. Discharge of the Transferee
Working Papers
Table of Worksheets
Worksheet 1 Federal Debt Collection Act of 1990 [Title XXXVI of the Crime Control Act of 1990 (P.L. 101-647)]
Worksheet 2 Uniform Fraudulent Transfer Act
Worksheet 3 Revenue Act of 1926 (P.L. 20) - S. Rep. No. 52, 69th Cong., 1st Sess. 28-30
Worksheet 4 Revenue Act of 1926 (P.L. No. 20) - H.R. Rep. No. 356 (Conf.) 69th Cong., 1st Sess. 42-45
Worksheet 5 Crime Control Act of 1990 (P.L. 101-647) - H.R. Rep. No. 736, 101st Cong., 2d Sess. 1 [To Accompany H.R. 5640, the Federal Debt Collection Procedures Act of 1990]
Worksheet 6 Phillips v. Comr., 283 U.S. 589 (1931)
Worksheet 7 Comr. v. Stern, 357 U.S. 39 (1958)
Worksheet 8 U.S. v. Craft, 535 U.S. 274 (2002)
Worksheet 9 IRM Provisions Relating to Transferee and Fiduciary Liability - IRM 34.6.2, 35.2.2.4 and 35.2.2.7
Worksheet 10 IRM 5.17.14, Fraudulent Transfers and Transferee and Other Third Party Liability
Bibliography
OFFICIAL
Statutes:
Treasury Regulations:
Committee Reports:
Revenue Rulings:
Cases:
UNOFFICIAL
Periodicals:
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