Qualified disclaimers and federal tax liens.

• Jurisdiction: United States
• Author: Bricher, James
• Date: 01 April 1999

The Federal government has the authority to attach a hen on all of a taxpayer's property for unpaid taxes, penalties and interest. A situation could arise in which a taxpayer subject to a tax hen is an estate beneficiary. In some situations, it may be advisable for the taxpayer to disclaim his beneficial interest to avoid subjecting the inheritance to the tax hen. The Federal courts remain divided on the issue of whether a qualified disclaimer may be used to defeat a Federal tax hen; this issue will probably have to be settled by the U.S. Supreme Court. In recent years, four Circuits have attempted to settle this issue, but remain evenly split in their opinions.

The relevant provisions are Secs. 2046, 2518 and 6321. Under Secs. 2046 and 2518, a qualified disclaimer made within nine months of a decedent's bequest is treated as if...