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My mother incurred a large IRS debt, when she transferred funds from an IRA to her bank , and did not put it into another IRA . I didn’t realize this until 2 years later when she got an IRS bill for 16,000!


I negotiated this down to 10k after writing many letters to the I RS on her behalf explaining that she did not know, and had the start of Alzheimer’s. Mom had to set up a payment plan, which was automatically deducted from her bank account, a minimum amount, being paid from her social security. I knew that with this low amount, she would probably not pay it off in her lifetime, but she could not pay that huge amount with her now facing large care bills coming up.


Now my mom has passed. And the bank froze her account, telling me my power of attorney ended in her death. So the IRS has now sent demand letters to my house.


Am I responsible for this? I did not yet respond to letters. Should I just mail them back saying deceased?

Are the demand letters in your name or Moms. Are u Executor of record?
No, you are not responsible for the debt but maybe responsible for showing where the money went. I agree that a tax lawyer or even a CPA maybe able to help you resolve this. So sorry Mom left you with this mess. I am still dealing with a house that is falling apart.
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Reply to JoAnn29
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If there is a will, then the Executor is now in charge. Like said, all debts have to be paid, including any Medicaid she received, before it can be distributed to the beneficiaries.

Everyone, be aware that IRAs and Bonds are differed income. You pay taxes when you cash them in. We cashed in bonds husband had taken out of his check when he started working at GM in 78. The interest rate was high. When we cashed some in we made 50k in interest owing the IRS 13k. We set aside that 13k for when we filed eoy. IRAs the same, you pay taxes on the interest you made at time of cashing them in.
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Reply to JoAnn29
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The money owed would have to be paid out of her estate. So they will look at the estate funds (accounts, investments, house, car, jewelry, etc.) and I think that whatever "funds" from the estate were distributed should have been considered and this debt paid off prior to distribution to family.

Depending on the letter - you may want to contact a tax attorney to see what needs to be done. IF there was enough in the estate - they will want that money. They may consider reducing or letting the debt go -- a tax attorney is best to advise on how to close this out.

You are not responsible for her debt unless you had some joint accounts, etc. or sold house, etc. You are responsible to have records of what was done, etc. and what was left of estate at time of death.
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Reply to Sunflo
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You personally are not responsible. However, her estate must pay this debt from any funds in the estate. If there is a house or other real estate it can be sold to pay this debt. If not sold, property maybe seized by the IRS.
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Reply to UsedupDIL
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