On October 3, 2018, the Sixth Circuit released its opinion in United States v Estate of Albert Chicorel, in which it held that the United States, seeking to enforce a claim for unpaid taxes, may perfect its claim after timely submitting a notice of claim to the personal representative of the Estate by filing a collection proceeding in Federal Court, even though the Federal court proceeding was filed more than ten years after the assessment of the tax.
The tax was first assessed by the IRS in September 2005. Chicorel did not pay before he died in the fall of 2006. An estate was opened and the four-month notice to creditors was published in May 2007. The IRS was not notified, despite the fact that it was a known creditor. The United States filed a proof of claim in the probate court in January 2009. It later filed its collection action in March 2016.
26 USC 6502-a requires that any tax assessment may be collected "by levy or by a proceeding in court" if the proceeding is begun within ten years of assessment. The issue presented, given the fact that the lawsuit was filed more than ten years after the assessment, was whether the filing of the notice of claim was a "proceeding in court."
The court found that it was. The filing of a notice of claim requires action by the personal representative, and has significant legal consequences for the creditor and for the estate.
What the court did not tell us is what the personal representative did with the notice - it must be disallowed if the PR does not believe it is properly payable - or why the United States took another seven years to file the lawsuit against the estate. Under the Sixth Circuit's analysis, once the notice of claim was submitted to the personal representative within the ten-year period, the United States could wait as long as it wished to file the collection action.
United States v Estate of Albert Chicorel (PDF)
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