Federal Tax

Transferee Liability (Portfolio 628)

  • The Portfolio, Transferee Liability, analyzes the application of §6901 and related judicial interpretations.


Bloomberg Tax Portfolio, Transferee Liability, No. 628, analyzes the rules of §6901 and related judicial interpretations. Beginning with a general discussion of transferee liability and its development from the so-called trust fund doctrine, the Portfolio distinguishes between transferee liability in equity and liability at law. The liability of a transferee at law or equity for the tax of the transferor is governed by state law and in some cases by federal statutes. The liability of the transferor is determined under the Internal Revenue Code. Section 6901 does not create a separate liability for the transferee; instead, it provides a regime to facilitate collection by the IRS from a third party of the tax due from the transferor and to permit the third party/transferee to contest the IRS determination in the U.S. Tax Court. The Portfolio also discusses the liability of a fiduciary under 31 U.S.C. §3713(b) and the application of §6901 to this type of liability.

Table of Contents

I. Introduction — Secondary and Derivative Liability for Taxes
II. Transferee Liability in General
III. Transferee Liability in Equity
IV. Transferee Liability at Law
V. Classes of Transferees
VI. The Extent of Transferee Liability
VII. Defenses Against Transferee Liability
VIII. Procedures for Enforcing Transferee Liability
IX. Effect of a Discharge in Bankruptcy

Ellen S. Brody
Roberts & Holland, LLP