How Does Tax Debt Work Posthumously?

Nashua Resident Looks for Advice After Losing a Loved One

If there is an outstanding tax debt at the time of death, the IRS can place a federal lien against the
estate. The taxes must then be paid before any other debts or accounts. If this is not done, then the IRS
can pursue payment from the legal representative of the deceased person. Unpaid federal taxes have a
lifespan of ten years. If the tax debt exceeds ten years, then this is no longer able to be collected. If the
debt is under ten years, the family of the deceased will be liable for payment to the IRS.

A Nashua resident had recently learned that her mother, who had just passed, had a significant amount
of outstanding tax debt. Concerned that she was responsible for the payment, she contacted
Merrimack Tax Associates for help.

Only Estate Money and Property Can Be Recouped for Outstanding Tax Debt

Family and friends of the deceased do not have to worry about their own assets and property being
seized by the IRS. However, the money and property belonging to the deceased that has outstanding
debt with the IRS will be seized to pay for these debts. If the assets are worth less than the debt, then
the IRS will settle by claiming the entirety of the estate. Once the debt has been paid, if there are any
remaining assets these can go to pay other outstanding debts and serve as an inheritance for those
designated.

Planning to Avoid Tax Debt After Death

Resolving any outstanding debts with the IRS immediately will prevent family members from being held
responsible for this payment out of your estate. For larger debts, the IRS may be willing to work out a
settlement and payment plan for repaying this debt. This way you can prevent loved ones from being
left with this additional burden.

The Nashua resident was relieved to hear that her own property and assets could not be seized by the
IRS. Thanks to assistance from the team at Merrimack Tax Associates, the debt was able to be promptly
paid from the estate.