Can the IRS force the recipient of a gift to pay the gift tax when the donor does not?
- December 6, 2016
- David Greene
- Comments Off on Can the IRS force the recipient of a gift to pay the gift tax when the donor does not?
When the donor of a large gift does not pay the gift tax owed, the IRS can seek to have the tax paid by the donee. This usually occurs in the situation where the donor has died without paying the tax. Internal Revenue Code Section 6324(b) states that when the donor does not pay the tax, the IRS can seize the gift for its value or otherwise look to the donee to pay. However, before paying one needs to make sure the IRS has not overvalued the gift and also make sure of the status of any capital gains tax or excise tax on the gift. Also, we need to consider the lifetime unified gift and inheritance tax exclusion. If the donee does have to pay some or all of the tax, he can make arrangements to pay over time using an installment agreement or an Offer in Compromise.