Tax Facts

210 / Can gift tax be collected from the donee of a life insurance policy or proceeds?

Yes. If the gift tax is not collected from the donor, the donee is liable for the tax. The government can collect the gift tax from the donee-beneficiary, and the latter’s liability is not limited to the policy’s cash value.1

1. IRC § 6324(b); Commissioner v. Chase Manhattan Bank, 259 F.2d 231 (5th Cir. 1958).

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