Fraudulent Transfer Statute of Limitations in Collection of Criminal Restitution

Florida law, and the law of most states, imposes a four year statute of limitations on a creditor’s allegations of fraudulent transfers under the fraudulent conveyance statute. The four year limitation does not apply when the creditor is the U.S. federal government or a government agency collecting court-ordered restitution.

A recent Colorado federal court case involved the collection of criminal restitution in favor of the U.S. government arising from the defendant’s violation of the Fair Debt Collection Practices Act. (“FDCPA”). The government sought to set aside the defendant’s transfer of a business asset more than four years after the transfer. The court held that the applicable statute of limitation was the twenty year limit applicable to the collection of IRS debt.

Criminal restitution in favor of the federal government is collectible in the same manner as a tax. Criminal restitution becomes a lien on all the property rights of the person fined for twenty years from imprisonment of the person ordered to pay restitution. The twenty year period cannot be curtailed by conflicting state laws applicable to fraudulent conveyance. This is another example of the enhanced collection powers of the federal government to collect taxes or restitution owed.

Last updated on May 22, 2020