How Far Can the IRS Look Back in Fraudulent Transfer Cases?

Published On:

Last Updated On:

On behalf of Silver Tax Group posted in IRS Tax Audits on Friday, September 16, 2016.

The number of fraudulent transfer cases prosecuted by the IRS since the financial meltdown in 2007 has dramatically risen. This is especially true concerning individuals who filed for bankruptcy protection. notes that a recent cases document the power the IRS has in pursuing such claims. Under federal law, U.S. Code § 6502 provides the IRS 10 years to collect taxes through levies or court ruling following the assessment of such a tax. However, under state law for many different states the statute of limitations for such enforcements is much shorter than that under federal law. So which statute of limitations applies? State or federal?

A U.S. bankruptcy court in August released a decision called In re Kipnis, 2016 WL 4543772 (Bankr. S.D. Fla. Aug. 31, 2016). This case involved a tax judgment debtor accused of transferring certain assets to his wife soon following an appeal of a taxing ruling in favor of the IRS. The trustee in the lawsuit attempted to pursue these assets in order that the IRS receives payment regarding the judgment.

The spouse of the debtor brought a motion to dismiss this claim. She argued that the IRS could not pursue the debt due to the statute of limitation having run under state law. However, the court denied her motion. The court did not follow one particular federal case disallowing a 10-year lookback period. Instead, the court followed four other decisions that did allow the 10-year lookback period. The bankruptcy court ruled that “the trustee in this matter is stepping into the shoes of a creditor that has sovereign immunity” (in this case, the IRS).

Contact a tax lawyer now

We don’t know yet the ultimate impact of In re Kipnis will have for Michigan taxpayers as this is an extremely recent action. However, this matter does demonstrate the authority the IRS has in collecting tax debt. It also does speak to the complexity of tax matters and how tax considerations can impact other areas of law such as bankruptcy.

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

Share The Knowledge! 😊

Share on linkedin
Share on twitter
Share on facebook
Share on reddit
Share on whatsapp
Share on email
Share on print

Get More Knowledge

Ready to secure your financial future? Subscribe Today For Tax Knowledge Tomorrow


IRS tax attorneys

We're Here For You.

Let’s end your IRS tax problems. Fill out the form below and we’ll provide you with a free consultation.

How Can we help?

Don’t worry, our consultations are 100% Confidential & 100% Free