If you are the spouse, executor, or administrator of a recently deceased person, you may be surprised to find a tax bill or IRS notice for the person in the mail.
Many people do not realize that a person’s tax responsibility does not disappear after their death. As such, the IRS can audit deceased people the same way they can living people.
So, can the IRS audit a dead person? Read on for the answer to this and a few other related tax questions regarding deceased individuals. Then contact our Levy and Associates team for IRS audit assistance.
The income a person receives in the year leading up to their death is taxable. As a result, after a person passes away, an executor or survivor of the deceased person will need to file federal tax returns on the dead person’s behalf.
If you are responsible for filing these tax returns, you will only need to report and pay taxes on the decedent’s income from the beginning of the taxable year until their death.
However, you should also review the tax laws for the decedent’s estate. You and any beneficiaries may need to pay taxes on the estate before you can receive income or assets. Speaking with a tax expert can help you understand your tax responsibility for any inheritances you receive.
The responsibility for filing a deceased person’s tax returns typically falls to the executor or administrator of the estate. However, if the decedent did not name anyone to these positions, a survivor of the deceased will need to take on the responsibility. This survivor may be the decedent’s spouse, child, or another immediate family member.
The short answer is yes — the IRS can audit a person who has passed away. If the IRS identifies any discrepancies in the deceased person’s tax returns, they can follow the same process to conduct an audit as they would for a living person.
The IRS has a statute of limitations of six years for tax audits. As a result, the IRS may send an audit notice for income the decedent reported in the years leading up to their death. You or the decedent’s administrator will be responsible for providing the requested information to the IRS.
The IRS may audit a dead person for the same reasons they audit living people.
The IRS conducts audits when it believes that people misreported information on their tax returns. The organization runs tax returns through a computerized scoring system to flag potential discrepancies. When this system flags a deceased person’s tax returns, the IRS will proceed as usual to conduct an audit.
Through an audit, the IRS will review the person’s financial information and verify whether the figures on their tax returns are accurate. If the organization identifies any discrepancies, you or the deceased person’s administrator may need to pay additional taxes on the decedent’s behalf from their estate.
If you have received a notice of an IRS audit for a person who has passed away, we recommend reading the message closely to understand what actions you need to take. You may need to send the deceased person’s financial documentation to the IRS. Alternatively, an officer from the IRS may meet with you in person to review this information.
If you’re unsure of the best steps following an IRS notice for a deceased person, we’d be happy to take the responsibility off your shoulders. Contact our tax experts at Levy and Associates today to request assistance at 1-800-TAX-LEVY.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.