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Timestamp: 2018-10-22 00:10:34
Document Index: 646008501

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Florida Bar Journal – Minimizing a Personal Representative’s Personal	Liability to Pay Taxes, Part I – The Florida Bar
November, 2004 Volume LXXVIII, No. 10
Minimizing a Personal Representative’s Personal	Liability to Pay Taxes, Part I
by William C. Carroll, John "Randy" Randolph
A personal representative (“PR”) of a Florida probate estate must be fully cognizant of his or her obligations to file tax returns and pay taxes on behalf of the decedent and the decedent’s estate. These obligations are numerous and include returns for income, estate, generation-skipping, gift and intangible taxes. A failure to file these tax returns and to pay these taxes could result in the PR being personally liable to the Internal Revenue Service or to the Florida Department of Revenue for any unpaid taxes, penalties, and interest. This personal liability can be asserted and collected by the federal and state government many years after the estate is closed. Additionally, the Florida Probate Rules specify that, before making complete distribution of estate assets to beneficiaries, the PR is obligated to settle all creditor claims and to pay or make provision for taxes and expenses of administration.1 Even if the PR is not personally liable to the IRS or the FDOR, the PR could be personally liable to the beneficiaries through a surcharge action based on a loss suffered because of a failure to pay taxes when due.
Part I of this article describes these tax returns and tax payment obligations and discusses the ways in which a PR can be held personally liable for failing to adhere to the applicable federal and state requirements. Part II suggests a course of action for a PR to minimize the risk of being personally liable for these taxes.
Federal Tax Obligations in General
Federal law requires the PR to file the decedent’s outstanding federal income and gift tax returns.2 Depending on the size of the estate and the amount of the decedent’s lifetime gifts, the PR may also be required to file a federal estate tax return.3 The PR is responsible for paying the federal estate tax, even if a part of the tax liability is attributable to assets which are not in the possession of the PR.4 With respect to the generation-skipping tax, the PR is required to report on the estate tax return any testamentary direct skips and is liable to pay the related generation-skipping tax.5 The PR must also report on the estate tax return, and pay, any direct skip generation-skipping tax resulting from a “trust arrangement” involving less than $250,000, such as a life insurance policy with a grandchild as the beneficiary.6
Federal Mechanism for Holding the PR Personally Liable for Taxes
If a PR fails to pay the decedent’s or the estate’s federal tax liabilities, he or she can be held personally liable for these taxes. 31 U.S.C. §3713(a) provides in part that a claim of the United States Government must be paid first when the assets in the estate of a deceased debtor are not enough to pay all debts of the debtor. 31 U.S.C. §3713(b) states that a representative of a person or an estate paying any part of a “debt” of the person or estate before paying a claim of the U.S. Government is personally liable to the extent of the payment for unpaid claims of the U. S. Government. Thus, a PR can be held personally liable to the U.S. Government if the PR pays a “debt” of the estate before satisfying the U.S. Government’s claims. A trustee of a trust which was revocable until the decedent’s death can also be personally liable for the decedent’s and the estate’s taxes.7
In addition to holding the PR personally liable pursuant to §3713(b), the IRS has other methods available for collecting unpaid taxes. The U.S. Government has a lien on all property of the taxpayer for assessed and unpaid taxes.8 This lien is commonly referred to as the general tax lien. The general tax lien does not arise until the tax is assessed. Additionally, the estate tax becomes a lien on the gross estate.9 This lien is a special tax lien. This special tax lien, unlike the general tax lien, attaches immediately upon the decedent’s death.10 Thus, in addition to, or in lieu of, holding a PR personally liable, the IRS can attach the property subject to any general or special lien. Additionally, the IRS can hold a transferee liable for any assessed tax deficiency of a taxpayer, decedent, or donor.11 This is known as “transferee liability.” The term “transferee” includes an heir, legatee, devisee, and distributee of an estate of a deceased person and a donee of any gift.12
Thus, holding a PR personally liable for unpaid taxes pursuant to §3713(b) is but one of several mechanisms available to the IRS for the collection of unpaid taxes. One commentator noted that §3713(b) is usually used by the IRS as a last resort in that, as discussed below, the Service cannot use §3713(b) unless it has satisfied certain conditions precedent.13 This same commentator, however, goes on to state that holding the PR personally liable may be the only effective weapon available because:
1)	the general tax lien may not be effective due to a distribution of assets from the estate before the tax was assessed;
2)	many types of transfers defeat the government’s security interest under the special tax lien statute (i.e., purchasers and secured creditors in certain instances); and
3)	a transferee may dissipate assets he or she received from the decedent’s estate.14
• Conditions Precedent to Personal Liability under §3713(b).
In order for a PR to be held personally liable under §3713(b) the following conditions precedent must be satisfied:
(1) the U.S. Government must have a claim;
(2) the PR must have knowledge of the government’s claim or be placed on inquiry notice of the claim;
(3) the PR must have paid a “debt”;
(4) the “debt” must have been paid at a time when the estate is insolvent or the “debt” must create the insolvency;15 and
(5) the IRS must have filed a timely assessment against the PR individually, or there must have been a timely filing of a court action against the PR personally.
Following is more detail on some of these conditions precedent:
• U.S. Government Claims
U.S. Government claims include taxes owed (even unassessed taxes) to the U. S. Government, and interest and penalties attributable to unpaid taxes.16
• PR’s Knowledge of Unpaid U.S. Government Claim
In general, a PR cannot be held personally liable for any unpaid tax of a decedent unless he or she has knowledge of the tax liability or knowledge of facts which would cause a reasonable person to inquire as to the existence of such tax liability.17 A PR who relies on the erroneous advice of legal counsel might avoid personal liability if the fiduciary can demonstrate limited experience in estate matters.18
• “Debt” Defined
To be held personally liable for federal taxes, one condition precedent is that the PR must have paid a “debt” of the decedent or the estate prior to satisfying the claim of the U.S. Government. What type of payments constitute the payment of a “debt”?
• Payments Which Do Not Constitute Payments of a Debt
Payment of amounts owed to a creditor with a security interest perfected prior to any federal tax lien does not constitute a “debt” payment under §3713(b).19 Payment of funeral expenses, administration expenses, including court costs and reasonable compensation for the fiduciary and his or her attorney, and payment of family allowances, do not constitute payment of “debts” under §3713(b).20 The IRS characterizes these amounts as charges against the property of the decedent to be deducted before the payment of “debts.”21 According to U.S. v. Blakeman, a Texas case, a surviving spouse’s homestead interest in a decedent’s property was not subject to the IRS lien against the decedent’s estate. Therefore, based on the court’s holding, a PR’s “distribution” of the life estate to the surviving spouse should not constitute the payment of a “debt” under §3713(b).22
• Payments Which Constitute Payments of a Debt
Payment of expenses of the decedent”s last illness are debt payments.23 A payment to an unsecured creditor constitutes a “debt” payment under §3713(b).24 Payment of state income taxes constitutes a “debt” payment.25 Although there do not appear to be any regulations, cases, or IRS rulings on point, it is the authors’ opinion that the payment of state estate taxes to states, such as Florida, which have a “pick up” tax would not constitute the payment of a “debt.” However, the payment of estate taxes in excess of the federal state death tax credit would, in our opinion, constitute a “debt” payment.26 The payment of state inheritance taxes constitutes a “debt” payment under §3713(b).27 Since the payment of state income taxes constitutes a “debt” payment, we also believe that the payment of the Florida intangibles tax would be a “debt” payment under §3713(b). The word “debt” also includes a beneficiary’s distributive share of the estate. If the PR distributes any portion of the estate to the beneficiaries before all of the federal taxes are paid, he or she could be held personally liable to the extent of the distribution.28 F. S. §731.201(10) defines “distributee” as a person who has received estate property from a PR or other fiduciary other than as a creditor or purchaser. Based on this definition, the satisfaction of the elective share should constitute a distribution from the estate and, if made prior to payment of federal tax liabilities, could expose the PR to personal liability.29
F. S. §733.707 sets forth the distribution priorities for insolvent estates and its priorities are, for the most part, consistent with the described case law, Treasury Regulations and IRS rulings determining what constitutes a debt payment for purposes of §3713(b). Under F. S. §733.707, administration expenses are provided first (“Class 1”) priority, funeral expenses are provided second (“Class 2”) priority, and federal debts and taxes are grouped in as third tier (“Class 3”) priorities. Last illness expense creditors are fourth tier (“Class 4”) claimants and other unsecured creditors of the decedent are relegated to Class 8. However, the family allowance is considered a Class 5 priority, below the U.S. Government Class 3 priority and, as mentioned, the IRS considers a reasonable family allowance payment to have priority over its claims.30
• Service of Notice of Liability Assessment on PR or Filing of Lawsuit Against the PR
The final condition precedent to asserting §3713(b) liability against the PR is that the IRS must either assess the fiduciary pursuant to Internal Revenue Code §6901 or file a lawsuit against the PR in federal district court pursuant to I.R.C. §7402(a).31 If the IRS utilizes I.R.C. §6901, it must follow the same procedures mandated for the assessment and collection of the underlying tax, such as the sending of a notice of liability, which is similar to a notice of deficiency, to the fiduciary.32
The I.R.C. §6901 assessment period expires on the later of one year after the liability arises or the expiration of the period of collection of the tax in respect of which such liability arises.33 The period of collection of the underlying tax is usually 10 years after assessment of such tax.34 Thus, under §6901, the IRS can assess personal fiduciary liability up to 10 years after assessment of the tax in respect of which such liability arises. If the IRS elects to assess the PR pursuant to §6901, the IRS presumably also has an additional 10 years to commence a collection proceeding against the PR. In Adler v. U.S.,35 the estate tax was assessed on April 18, 1989. The §6901 assessment for fiduciary liability for the failure to pay the estate tax was made on August 22, 1994. The court noted that the collection period against the estate expired on April 18, 1999, but that the collection period for §6901 fiduciary liability commenced on August 22, 1994, which meant that the Service had until August 22, 2004, to commence a collection proceeding against the PR personally.36
Alternatively, if the IRS decides to forego assessment under §6901 and, instead, chooses to file suit against the PR for §3713(b) liability in federal district court pursuant to I.R.C. §7402(a), the suit must be filed within the limitations period for collecting the underlying tax.37 Further, a proceeding under I.R.C. §7402(a) requires the IRS to commence the collection proceeding generally within 10 years of the assessment of the underlying tax.38 Thus, unlike a I.R.C. §6901 assessment, which according to Adler allows for consecutive 10-year assessment and collection periods (20 years total), a I.R.C. §7402(a) proceeding requires that the lawsuit seeking §3713(b) liability and the collection on that liability must all occur within 10 years of the assessment of the underlying tax.
Florida Law as Defense to Being Liable for Payment of Federal Taxes
The Florida Probate Code contains detailed procedures for settling claims against a decedent’s estate for the decedent’s pre-death liabilities. This procedure requires publication of a notice to creditors in a local newspaper, a diligent search for reasonably ascertainable creditors, and service on these reasonably ascertainable creditors of a copy of the notice to creditors.39 F. S. §733.702(1) bars the claims of creditors who have not filed a claim in the probate proceeding on or before the later of the date that is three months after the time of the first publication of the notice to creditors or, as to any creditor required to be served with a copy of the notice to creditors, 30 days after the date of service on the creditor. One might be tempted to think, then, that if the PR could serve the IRS with a notice to creditors, and if the IRS failed to file a timely claim against the estate, then the PR, in his or her individual capacity, would be absolved from paying the tax debt. This is not the case.
The claims procedure set forth in F. S. §733.2121 and 733.702(1) does not cut off the decedent’s federal tax liabilities. For instance, in U.S. v. Stevenson,40 the IRS sought to obtain a judgment against the estate and the PR for the decedent’s unpaid federal income tax liabilities. The PR objected, asserting that the IRS did not make a claim against the estate within the time frame set forth in F. S. §733.702. The U. S. District Court for the Middle District of Florida held that the failure to timely file a claim pursuant to F. S. §733.702 does not bar the U.S. Government from seeking payment of unpaid taxes. In fact, even the two-year statute of repose set forth in F. S. §733.710(1) does not bar the IRS from asserting liability against an estate for a decedent’s unpaid tax liabilities.41 The U.S. Government is not bound by state statutes of limitation in enforcing its rights. Further, a probate court order discharging the PR does not bar the IRS from asserting personal liability against the PR under §3713(b).42
There are a few federal district court cases standing for the proposition that if the U.S. Government files a probate claim it is then a party to the probate proceeding and is bound by the court’s rulings with respect to this claim, even if the claim is ruled to have a priority lower than as mandated under federal law. In such a case, the U.S. Government could not then seek to hold the PR personally liable for any claim amounts in excess of that granted by the court.43
The IRS, in a 2002 chief counsel advisement, rejected the holding in these cases, concluding that the U.S. Supreme Court’s decision in King v. U.S., 379 U.S. 329 (1964) means that a fiduciary is personally liable under §3713(b) even though the IRS is a party to the court proceeding.44 In this chief counsel advisement, the Service reasoned that, even when the IRS has filed a claim and fails to object to a proposed plan of distribution, the fiduciary has a duty to present the IRS claim to the court, recommend that it be paid first and object if the court attempts to assign the claim a lower priority. Accordingly, even if the IRS files a claim in the estate, the PR should actively assert the U.S. Government’s priority under §3713(a), knowing that the failure to do so could lead to the IRS assertion of personal liability against the PR under §3713(b).
A PR who is administering a potentially insolvent estate might consider filing a federal district court quiet title action against the U.S. Government pursuant to 28 U.S.C. §2410(a). In Estate of Johnson v. U.S., 836 F.2d. 940 (5th Cir. 1988), an executor of a Texas estate successfully argued that he had a right to a quiet title action to determine if administration and funeral expenses had priority over federal tax liens. However, pursuant to the IRS’s position in the abovementioned chief counsel advisement, the PR should be aware that any quiet title court order may not protect the PR from an IRS assertion of personal liability under §3713(b).
Finally, if a PR is liable under §3713(b), the PR will soon realize that the collection powers of the IRS are enormous. Due to federal preemption, Florida’s exempt property statutes and constitutional homestead laws do not preclude the IRS from attaching these personal assets for collection.45 Additionally, the U. S. Supreme Court recently held that tenants by the entirety assets can be reached to satisfy the federal tax liabilities solely owed by one spouse.46
Florida Tax Obligations
Estate Tax. Florida imposes an estate tax on resident decedents47 and on the Florida situs property of nonresident and nonresident alien decedents.48 The Florida estate tax is based on the credit to the federal estate tax allowed for state death taxes. This federal credit is set forth in I.R.C. §2011. Pursuant to I.R.C. §2011(f), this federal credit is being gradually phased out and is completely eliminated for decedents dying after December 31, 2004. However, under current law, I.R.C. §2011(f) is scheduled to “sunset”on December 31, 2010.49 Thus, under current law, there will be no Florida estate tax for years 2005 through 2010, but there will be Florida estate tax in years 2004, 2011, and beyond.
F.S. §198.13(1) requires the PR to file with the FDOR an executed copy of the federal estate tax return. The PR is also required to file a Florida Estate Tax Return (Form F-706).50 An executed copy of the federal estate tax return and a Form F-706 only need to be filed if the PR is required by federal law to file a federal estate tax return.51 When a federal estate tax return is not required to be filed, then the PR can file an affidavit of no Florida estate tax due (Form DR-312) with the clerk of court in each county where the decedent owned property.52
F.S. §198.26 bars the probate court from accepting a PR’s final account until the Florida estate tax has been paid. Similar to §3713(b), a PR can be held personally liable for the Florida estate tax to the extent that he or she makes distribution, in whole or in part, to the beneficiaries without paying or securing the Florida estate tax or without having the distributed property released from the estate tax lien.53
Generation-skipping Tax. Although Florida does impose a generation-skipping tax (GST tax), normally individuals and fiduciaries other than the PR are responsible for paying the GST tax and filing the GST tax returns.54 The Florida GST tax is not imposed on direct skips, such as a devise in a will to a grandchild. The Florida GST tax is imposed on taxable terminations and taxable distributions, such as a termination of a non-GST tax exempt trust upon the death of the settlor’s child with its principal being distributed to a grandchild.55 Thus, it is the trustee or the beneficiaries, and not, for example, the PR responsible for administering the will under which the trust was created, who must pay the tax.
Intangible Tax. F.S. §199.032 imposes an annual tax of 1 mill56 (.001) on each dollar of all taxable intangible personal property with a Florida situs. Certain types of intangible assets are exempted from the annual levy.57 For individuals, the first $250,000 of assets subject to the tax is exempted ($500,000 for a married couple filing jointly).58 A Florida domicillary who owns intangible personal property must annually file an intangible tax return.59
There is no intangible tax statute which explicitly obligates the PR to file any outstanding intangible tax returns of the decedent. However, a PR should do so. A PR has a duty to settle the estate, including the payment of the decedent’s valid claims and taxes.60 A PR is required to file an intangible tax return for the estate itself and to pay the corresponding tax.61 FDOR imposes delinquent payment, late filing, undervaluation, and omitted property penalties as well as interest on late intangible tax payments.62 Failure of the PR to avoid penalties and interest by not paying the decedent’s intangible tax could expose the PR to surcharge by the beneficiaries.
A PR is obligated to serve a copy of the inventory and all supplemental and amended inventories on the FDOR. The PR must also file proof of service with the court.63 Surprisingly, Fla. Admin. Code 12C-2.008(4) also requires fiduciaries to provide the FDOR with a copy of all accountings required to be filed with the court.
Homestead Property Tax Exemption. A PR must also be aware that F. S. §193.155(9) allows the property appraiser to place a lien against real property and impose taxes, interest, and a penalty equal to 50 percent of the unpaid taxes if the appraiser determines that the property was not entitled to a homestead property tax exemption. The homestead property tax exemption is only available to persons who, on January 1 of any year, reside on the real property.64 Thus, if a decedent dies prior to January 1 and the property is in the estate subsequent to January 1 then, in order for the estate to avoid the penalties and interest mandated by F.S. §193.155(9), the PR should notify the property appraiser that the property is no longer eligible for the homestead property tax exemption.65 Protected homestead, as defined in F.S. §731.201(29), is not subject to probate,66 which means the PR has no obligations with respect to this property. However, because it is not always clear whether the property is protected homestead, the authors recommend notifying the property appraiser of the decedent’s death. If, pursuant to F.S. §733.608(2), the PR takes possession of protected homestead property the PR is then charged with the duty to preserve and protect the property. In this case, if F.S. §193.155(9) taxes, penalties and interest are assessed, then the PR could be subject to personal liability as a result of a beneficiary surcharge action.
Probate Claims Procedure
F.S. §733.702(1) specifically states that the probate claims procedure set forth in F.S. §733.702 applies to claims of the State of Florida and any of its political subdivisions. However, this claims procedure only applies to those of the decedent’s debts “that arose before the death of the decedent.”67 Thus, it is not applicable to Florida estate taxes, the estate’s intangible taxes, and any post-death underpayment of property taxes (due to a failure to remove a homestead property tax exemption). Therefore, for instance, a PR could not assert the failure of the FDOR to file a timely claim for unpaid estate taxes as a defense to the PR being held personally liable under F.S. §198.23.
If the PR has reason to believe that a decedent owes amounts to the FDOR (such as intangible tax), the PR is obligated to serve a copy of the notice to creditors on the FDOR.68 F.S. §733.2121(3)(e) states that, if the FDOR has not previously been served with a copy of the notice to creditors, service of the inventory on it shall be the equivalent of service of a copy of the notice to creditors. The authors recommend that the PR, in all cases, promptly serve the FDOR with a copy of the notice to creditors, and that the PR not rely on F.S. §733.2121(3)(e). Prompt service of a notice to creditors on the FDOR can cut off a claim sooner than would be the case if the PR simply relied on the service of the inventory as a deemed service of a copy of the notice to creditors.
For the decedent’s unpaid intangible taxes, the FDOR has a claim period which extends beyond that set forth in F.S. §733.702(1). With respect to intangible taxes, F. S. §733.702(5) provides the FDOR two additional windows of opportunity to file claims against the estate after the expiration of the F. S. §733.702(1) claims period. The first window is that the FDOR may file a claim within 30 days after the service of the inventory. The second window allows the FDOR to file a claim within 30 days of the service on it of the estate tax return, or of an amended or supplemented inventory or filing of an amended or supplemental estate tax return, but only as to the new information disclosed on the amended or supplemental inventory or return.
This Part I described the various tax responsibilities of a PR and the ways the PR can be held personally liable for failing to meet these duties. Part II, which will appear in the December issue of the Bar Journal, recommends steps a PR can take to minimize personal liability for these tax obligations. q
1	Fla. Prob. R. 5.400(b)(2) and (3).
2	I.R.C. §6012(b)(1); Treas. Reg. §25.6019-1(g). This article refers to the Internal Revenue Code of 1986, as amended.
3	I.R.C. §6018(a).
4	I.R.C. §2002; Treas. Reg.§20.2002-1.
5	Treas. Reg. §26.2662-1(c)(1)(v).
6	Treas. Reg. §26.2662-1(c)(2)(iii). A “trust arrangement” is any arrangement which, although not an explicit trust, has the same effect as an explicit trust. Treas. Reg. §26.2662-1(c)(2)(ii). See also example at Treas. Reg. §26.2662-1(c)(2)(vi), Ex. 1. If a PR pays the generation-skipping tax resulting from a trust arrangement that is a direct skip, the PR is entitled to recover from the recipient of the property the generation-skipping tax attributable to the direct skip. Treas. Reg. §26.2662-1(c)(2)(v); Fla. Stat. §733.817(8)(a).
7	31 U.S.C. §3713(a) and (b) apply when federal taxes are owed, when a person, such as a trustee, is in control of assets, and when such person is charged with the duty of applying it to debts of an insolvent. Bramwell v. U.S. Fidelity & Guaranty Co., 269 U.S. 483 (1926), and King v. U.S., 379 U.S. 329 (1964). Fla. Stat. §§737.3054(1) and 733.607(2) impose a duty on the trustee of a revocable trust to pay to the personal representative of the grantor’s estate any amounts that the PR certifies in writing to the trustee as required to pay the expenses of the administration and obligations of the grantor’s estate. Further, I.R.C. §6324(a)(2) imposes personal liability on a trustee when the estate tax is not paid when due and the trustee received the decedent’s assets or is administering a trust with assets included in the decedent’s gross estate under I.R.C. §§2034 through 2042. I.R.C. §2204(b) provides a mechanism for fiduciaries other than PR’s to be discharged from personal liability for the estate tax. I.R.C. §2204 is discussed in Part II of this article.
8	I.R.C. §§6321 and 6322.
9	I.R.C. §6324.
10	Treas. Reg. §301.6324-1(a)(1).
11	I.R.C. §6901(a)(1)(A); Treas. Reg. §301.6901-1(a)(1).
12	Treas. Reg. §301.6901-1(b). See endnote 7 for a discussion of transferee liability under I.R.C. §6324(a)(2) as it pertains to a trustee of a (former revocable) trust.
13	Ferguson, Freeland and Ascher, Federal Income Taxation of Estates, Trusts, and Beneficiaries §13.03[A] (2002 Supp.).
15	31 U.S.C. §3713(a)(1)(B); Ferguson, Freeland and Ascher, Federal Income Taxation of Estates, Trusts, and Beneficiaries §13.03[B] (2002 Supp.); BNA Portfolio 832: Estate Tax Payments and Liabilities (X)(F)(2) (Tax Management Inc. 2003).
16	Rev. Rul. 80-112, 1980-1 C.B. 306; Treas. Reg. §20.2002-1; Treas. Reg. §25.2502-2; U.S. v. Coppola, 85 F. 3d 1015 (2d Cir. 1996); U. S. v. Munroe, 65 F. Supp. 213 (W. D. Pa. 1946); Viles v. Commissioner, 233 F.2d 376 (6th Cir. 1956); Rev. Rul. 79-310, 1979-2 CB 404.
17	Rev. Rul. 66-43, 1966-1 C.B. 291.
18	See Little v. Commissioner, 113 T.C. 474 (1999) (fiduciary not personally liable where he had limited education and had no experience administering an estate and had requested advice of legal counsel); but see New v. Commissioner, 48 T.C. 671 (1967) (fiduciary was an attorney with experience in estate administration held personally liable).
19	U.S. v. Romani, 523 U.S. 517 (1998); I.R.S. Internal Revenue Manual 34.9.1.8(2); Michael I. Saltzman, IRS Practice and Procedure &16.08[1].
20	I.R.S. Internal Revenue Manual 34.9.1.8 (3).
21	Rev. Rul. 80-112, 1980-1 C.B. 306; I.R.S. Internal Revenue Manual 34.9.1.8(3).
22	U. S. v. Blakeman, 750 F. Supp. 216 (N.D. Tex. 1990), reversed on other grounds by U.S. v. Blakeman, 997 F. 2d 1084 (5th Cir. 1992), cert. den. by Blakeman v. U.S., 510 U.S. 1042 (1994); but see Weitzner v. U.S. 309 F. 2d 45 (5th Cir. 1962) (a federal tax lien can be enforced against homestead property).
23	In re Estate of Muldoon, 275 P. 2d 597 (Cal. Dist. Ct. App. 1954); Rev. Rul. 80-112, 1980-1 C.B. 306.
24	U.S. v. Waddill, Co., 323 U.S. 353(1945); BNA Portfolio 832: Estate Tax Payments and Liabilities (X)(F)(2)(a) (Tax Management Inc., 2003).
25	Rev. Rul. 79-310, 1979-2 C.B. 404.
26	A state estate tax, such as Florida’s, which is solely based on the current federal state death tax credit, results in a dollar-for-dollar credit against the federal estate tax. However, the payment of a state estate tax which is not exclusively tied to the federal state death tax credit could result in amounts in excess of the federal credit being paid to a state. It is this excess which the authors believe would constitute a debt payment under §3713(b).
27	Blakeman, 750 F. Supp. at 224 (PR paid, by use of funds of the estate, $13,525 to the State of Texas for inheritance taxes and the court found PR personally liable to the U.S. Government for this amount pursuant to 31 U.S.C. §3713); see Estate of Walker v. Tenn. Dept. of Revenue, 1999 WL 486929 (Tenn. Ct. App. 1999) (federal income and estate taxes entitled to priority treatment over Tennessee state inheritance taxes).
28	Treas. Reg. §20.2002-1; Treas. Reg. §25.2502-2; Priv. Ltr. Rul. 8843011 (Oct. 28, 1988); Rev. Rul. 80-112, 1980-1 C.B. 306.
29	But see Estate of Gray v. I.R.S., 1996 WL 64006 (Tenn. Ct. App. 1996) (Tennessee elective share to be paid prior to unsecured debts of the decedent including the claim of the IRS for income taxes). It is important to note that Tennessee’s elective share statute at issue in the Gray case specifically exempted the elective share from unsecured debts of the decedent. Florida’s elective share statute does not. See Fla. Stat. §732.2055(5)(a).
30	I.R.S. Internal Revenue Manual 34.9.1.8 (3)(B).
31	U.S. v. Motsinger, 123 F. 2d 585 (4th Cir. 1941); BNA Portfolio 638-2d: Federal Tax Collection Procedure, Vii(D) (Tax Management Inc., 2004).
32	I.R.C. §6901(a)(1)(B) and (g).
33	I.R.C. §6901(c)(3).
34	I.R.C. §6502(a).
35	88 AFTR 2d 2001-5132 (B.R. E.D. La. 2001).
36	See also BNA Portfolio 832: Estate Tax Payments and Liabilities (X)(F)(4) (Tax Management Inc. 2004).
37	Motsinger, 123 F.2d at 587.
38	Id.
39	Fla. Stat. §733.2121.
40	159 F. Supp. 2d 1371 (M.D. Fla. 2001).
41	U.S. v. Summerlin, 310 U.S. 414 (1990).
42	Beasley v. Commissioner, 42 B.T.A. 275 (1940).
43	U.S. v. Pate, 47 F. Supp. 965 (W.D. Ark. 1942); U.S. v. Muntzing, 69 F. Supp. 503 (N.D.W.Va. 1946).
44	I.R.S. Chief Counsel Advisement 200210063.
45	See Weitzner v. U.S., 309 F. 2d 45 (5th Cir. 1962) and Note 30.02.01 of Attorneys Title Insurance Fund, Inc.: Fund Title Notes (A federal tax lien can be enforced against homestead property); Busby v. IRS, 79 A.F.T.R. 2d 97-1493 (S.D. Fla. 1997); Lawler v. Suntrust Securities, Inc.,, 740 So. 2d 592 (Fla. 5th D.C.A. 1999) (Florida’s exempt property statutes do not preclude IRS levy).
46	U.S. v. Craft, 122 S. Ct. 1414 (2002).
47	Fla. Stat. §198.02
48	Fla. Stat. §198.03 and §198.04.
49	Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. No. 107-16, §901(a)-(b).
50	Fla. Admin. Code 12C-3.0015(3)(b).
51	Fla. Stat. §198.13(1).
52	Fla. Admin. Code 12C-3.0015(2)(a)(2); Fla. Stat. §198.32(2).
53	Fla. Stat. §198.23. Like the federal special estate tax lien (I.R.C. §6324), Florida has an estate tax lien upon the gross estate of the decedent, arising on the decedent’s date of death. Fla. Stat. §198.22 and §198.32.
54	Fla. Stat. §198.021 (tax upon generation-skipping transfers of residents) and Fla. Stat. §198.031 (tax upon generation-skipping transfers of nonresidents); I.R.C. §§2604 and 2603(a)(1) and (2). Pursuant to Treas. Reg. §26.2662-1(b)(1) and (2), a trustee must file Form 706GS(D-1) to report a taxable distribution; the beneficiary of a taxable distribution reports and pays the GST tax by filing Form 706GS(D); and the trustee reports and pays the GST tax with respect to a taxable termination on Form 706GS(T). Like the I.R.C. §2011 state death tax credit, the federal GST tax credit is scheduled for temporary repeal for post-December 31, 2004 GST transfers with reinstatement on December 31, 2010. I.R.C. §2604(c) and Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. No. 107-16, §901(a)-(b).
55	53 Fla. Jur. 2d §2345.
56	1 mill rate effective for tax years beginning after December 31, 2000. Prior to this effective date, the mill rate varied and was as high as 2 mills. See Historical and Statutory Notes to F.S.A. §199.032(2004).
57	See Fla. Stat. §§199.185 and 199.032.
58	Fla. Stat. §199.185(2).
59	Fla. Stat. §199.052(1).
60	Fla. Stat. §733.602(1); Fla. Prob. R. 5.400(b)(2) and (3).
61	Fla. Stat. §199.052(7); F.A.C. 12C-2.006(5).
62	Fla. Admin. Code 12C-2.007.
63	See Fla. Prob. R. 5.340(d); Fla. Admin. Code 12C-2.008(5)(b).
64	Fla. Stat. §196.031(1).
65	For a detailed discussion of the property tax homestead exemption, see Roger S. Franklin and Roi E. Baugher III, Protecting and Preserving the Save Our Homes Cap, 77 Fla. B.J. 34 (Oct. 2003).
66	Fla. Stat. §733.608(1).
67	Fla. Stat. §733.702(1).
68	Fla. Stat. §733.2121(3)(a).
William C. Carroll is an associate with the law firm of Edwards & Angell, LLP, in West Palm Beach. His practice focuses exclusively in the areas of estate planning and estate and trust administration. Mr. Carroll received his J.D. and LL.M. in taxation from the University of Denver College of Law. Mr. Carroll is board certified in both wills, trusts and estates law and tax law.
John “Randy” Randolph is a shareholder in Pressly & Pressly, P.A., West Palm Beach, where he devotes his practice exclusively to trust and estate matters. He is board certified wills, trusts & estates as well as tax law. Mr. Randolph is a graduate of the University of Florida College of Law (with honors) and received his LL.M. from the University of Miami in estate planning. He is also a certified public accountant.
The authors thank Jennifer Gurevitz, a law clerk at Pressly & Pressly, for her assistance in preparing this article.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Laird A. Lile, chair, and William P. Sklar and Richard R. Gans, editors.