The IRS And Nominee Liability

Nominee Liability

Under the Internal Revenue Code, the IRS can satisfy a tax deficiency by imposing a lien on any "property" or "rights to property" belonging to the taxpayer. The statutory language is broad and reaches virtually every interest in property that a taxpayer might have, with limited exceptions. In fact, the IRS's legal ability to reach "property" and "rights to property" can include not only property and rights to property owned by the taxpayer in the taxpayer's name, but also property held by a third party if the third party is holding the property as a nominee of the delinquent taxpayer.

What is a nominee?

Under the nominee doctrine, the IRS may reach property held by a taxpayer's nominee-that is, such property may be subject to a federal tax lien or levy. The true owner of a parcel of land or other property may be someone other than the record owner.