How can the IRS collect from a deceased person when there is no estate?

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How can the IRS collect from a deceased person when there is no estate?

My mother died about 2 1/2 years ago. She had no Will or property but did have a transfer on death account worth about $140,000 which was cashed out under her SSN and distributed in equal shares to her children. The IRS wants the family to complete a tax return for her. What do you advise?

Asked on September 10, 2012 under Estate Planning, Texas

Answers:

Catherine Blackburn / Blackburn Law Firm

Answered 9 years ago | Contributor

I am not tax lawyer or tax accountant.  I suggest you get one and follow their advice.  The Internal Revenue Code defines "estate" in a very broad way and definitely will reach the bank account that you mentioned.  It does not matter that no one opened a formal probate for your mother.

On the other hand, $140,000 is well below the federal estate exemption applicable 2 1/2 years ago.  It is very likely that no estate tax will be due.  I cannot speak to any estate taxes applicable to your state as Florida has no estate tax.

You may be liable for penalties as a result of failing to file a return.  This is why I strongly recommend that you find a good accountant with IRS experience to help you.  With that assistance, you should be able to wrap this up with a minimum of difficulty.


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