my letter to IRS about gift to my brother

[boston78]

What is the name of your state? Texas
I gave $5000 as a cash gift to my brother last year. IRS conducted a tax audit on my brother and he gave the letter, which I gave him, to IRS and the issue is solved. I recently lost a lawsuit in a case. Whether the letter I gave to my brother (which he gave to IRS) be available to my creditor when the creditor requests any of my documents from IRS ? or that latter will be available only when the creditor reaches my brother’s IRS documents?

 

[Taxing Matters]

Whether the letter I gave to my brother (which he gave to IRS) be available to my creditor when the creditor requests any of my documents from IRS?

A private creditor won't get anything about your IRS tax record from the IRS simply by requesting it from the IRS. You'll have to authorize the creditor to get those records. It is very unlikely that your letter is in any of the records the IRS has for you. It's a part of your brother's tax audit file.

That said, if the creditor directly asks you about gifts made in a deposition, you are supposed to tell the truth and disclose the gift you made to your brother. Not doing that could subject you to sanctions if the gift is discovered later on.

Note that depending on the details of the gift and your financial situation at the time of the gift that gift might not be an issue. A lawyer that represents debtors can tell you more about that.

or that letter will be available only when the creditor reaches my brother’s IRS documents?

Your creditor cannot get any of your brother's tax records simply asking for it. The IRS would need to have your brother's permission to give that information to your creditor, and your brother will have no obligation to provide that. And your brother shouldn't provide that permission. It's your debt, not his.

 

[Zigner]

What is the name of your state? Texas
I gave $5000 as a cash gift to my brother last year. IRS conducted a tax audit on my brother and he gave the letter, which I gave him, to IRS and the issue is solved. I recently lost a lawsuit in a case. Whether the letter I gave to my brother (which he gave to IRS) be available to my creditor when the creditor requests any of my documents from IRS ? or that latter will be available only when the creditor reaches my brother’s IRS documents?

Did you give the "gift" while the lawsuit was in progress, or did you give the gift prior to the lawsuit being filed?

 

[adjusterjack]

I gave $5000 as a cash gift to my brother last year. I recently lost a lawsuit in a case.

You may have made a fraudulent transfer under the Texas Uniform Fraudulent Transfer Act, whether you did it before, during, or after the lawsuit.

Please read Sections 24.005 and 24.006.

BUSINESS AND COMMERCE CODE CHAPTER 24. UNIFORM FRAUDULENT TRANSFER ACT (texas.gov)

Then read the entire statute.

 

[Taxing Matters]

While it is possible that the transfer would be characterized as a "fraudulent transfer" under the Uniform Fraudulent Transfer Act, the use of the word "fraudulent" in this statute does not refer to you committing any crime. Rather, this statute provides a way for creditors to recover assets that debtors have transferred for less than full value, particularly to friends and relatives of the debtor, by going after the person to whom you transferred the asset. Here, that would allow the creditor to recover the $5000 from your brother if the transfer were "fraudulent".

 

[zddoodah]

Whether the letter I gave to my brother (which he gave to IRS) be available to my creditor when the creditor requests any of my documents from IRS ?

Huh? Why would you expect your judgment creditor to request documents from the IRS regarding you or your brother or the IRS to provide documents in response to such a request? Even if such a request were made, there is no mechanism for an ordinary judgment creditor to obtain documents from the IRS (aside from you granting authorization).

 

[davew9128]

The creditor can request anything they want from IRS. They aren't getting it without a court issued subpoena or your brother's written authorization.

 

[LdiJ]

The creditor can request anything they want from IRS. They aren't getting it without a court issued subpoena or your brother's written authorization.

In some cases not even a court ordered subpoena works.

 

[davew9128]

In some cases not even a court ordered subpoena works.

Agreed. A valid subpoena and a FOIA request for the audit file on the brother. Which is incredibly unlikely to happen considering brother isn't a party to the lawsuit.

 

[boston78]

So many thanks to everyone. Is it the responsibility of the creditor to prove (either based on my admission or any other legal way) that my brother received money from me, prior to getting a valid subpoena and a FOIA request for the audit file on my brother?

 

[Taxing Matters]

So many thanks to everyone. Is it the responsibility of the creditor to prove (either based on my admission or any other legal way) that my brother received money from me, prior to getting a valid subpoena and a FOIA request for the audit file on my brother?

No. If the creditor could already prove that there would be no need to try to get the letter from the IRS. But the creditor does have to show the court that it's likely evidence would be found to aid in the collection of the debt to get the court order. Unless the creditor has some inkling of the gift already it won't be able to do that or have any idea to even consider looking there. Also, there is the matter of cost. The creditor would have to pursue the court order in federal court since state courts cannot order the IRS to do anything. That's not cheap, and likely cost them more then what the creditor might actually get from pursuing this line of attack. Even after getting the letter from the IRS the creditor would then need to go back to state court to get the fraudulent conveyance order.

The creditor can submit a FOIA request for free, but the IRS will reject it because your brother's tax records are protected from FOIA disclosure under Internal Revenue Code (IRC) § 6103. Ultimately your brother would need to agree to submit a privacy act (PA) or FOIA request himself to get the letter from the agency using an administrative process (i.e. without going to court).

 

[boston78]

So many thanks....