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* * * * * * *
(b) A representative of a person or an estate
* * * paying any part of a debt of the person or estate
before paying a claim of the Government is liable to
the extent of the payment for unpaid claims of the
Government.
This section appears to impose strict liability on a
fiduciary who makes a disbursement which leaves the estate with
insufficient funds with which to pay a debt owed to the United
States. However, courts have long departed from such a rigid
interpretation. "[I]t has long been held that a fiduciary is
liable only if it had notice of the claim of the United States
before making the distribution." Want v. Commissioner, 280 F.2d
777, 783 (2d Cir. 1960); see also Leigh v. Commissioner, 72 T.C.
1105, 1109 (1979). Whether the fiduciary had notice is
determined by whether the executor knew or was chargeable with
knowledge of the debt. "The knowledge requirement of 31 U.S.C.
sec. 192 [now 31 U.S.C. sec. 3713] may be satisfied by either
actual knowledge of the liability or notice of such facts as
would put a reasonably prudent person on inquiry as to the
existence of the unpaid claim of the United States." Leigh v.
Commissioner, supra at 1110 (citing Irving Trust Co. v.
Commissioner, 36 B.T.A. 146 (1937); Livingston v. Becker, 40 F.2d
673 (E.D. Mo. 1929)). To be chargeable with knowledge of such a
debt, the executor must be in possession of such facts as to "put
him on inquiry." New v. Commissioner, 48 T.C. 671, 676 (1967).
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