A federal District Court in New York recently determined that an executor of an estate was personally liable for an IRS levy when he distributed funds to a beneficiary after being notified of the levy. U.S. v. Michel, (2012 D.C.N.Y.) 110 AFTR 2d 2012-5117. Liability attached even though the executor's attorney advised him that the levy had been satisfied. The court determined that the attorney was not a necessary party in order to determine whether the IRS could prevail against the executor. The court determined that even if the executor had acted in good faith, the absence of intentional or negligent conduct was not relevant to his liability under Internal Revenue Code Section 6332 for failing to satisfy the levy.

It is strongly urged that executors or trustees who are notified of an IRS levy should obtain documentation from the IRS that the levy has been satisfied prior to making distributions to beneficiaries.

About the author: David Elliott excels at critical thinking and strategic planning. He enjoys solving problems. He received his B.A. in mathematics from Vanderbilt University, magna cum laude, and his J.D. from Duke University School of Law. He writes articles on a myriad of subjects he finds interesting and in which he practices, including tax, finance, estate planning, corporate governance and strategy, transactions, and immigration. Mr. Elliott can be reachedhere.

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