Is It Too Late to Disclaim an Inheritance if the IRS Has a Lien Against a Beneficiary?

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Administration Attorney

Question. Is it too late to file a disclaimer by an estate beneficiary if a Notice of Federal Tax Lien has already been filed against him or her? A tax lien is a claim by the federal government against a taxpayer for alleged money owed to either the IRS or the United States Government. Would the filing of a disclaimer in this instance violate N.J.S.A. 3B:9-9 (a)(6) as a “fraud on the individual’s creditor’s as set forth in the Uniform Fraudulent Transfer Act, R.S. 25:2-20 et seq.

The answer is really straight forward. In Dry v. US, 528 US 49(1999) – The US Supreme Court held that a disclaimer did not defeat the penalty of a federal tax lien. “The Internal Revenue Code’s prescriptions are most sensibly read to look to state law for delineation of the taxpayer’s rights or interest, but to leave to federal law the determination whether those rights or interests constitute ‘property’ or ‘rights to property’ within the meaning code section §6321. ‘[O]nce it has been determined that state law creates sufficient interests in the [taxpayer] to satisfy the requirements of the federal tax lien provision state law is inoperative to prevent the attachment of liens created by federal statues in favor of the United States.

In simple speak it means a disclaimer won’t work to defeat the rights of the US pursuant to a federal tax lien. It also won’t work to defeat the claim of a New Jersey creditor who secures a judgment against the taxpayer debtor.

To discuss your NJ Estate Administration matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.