Can the IRS take a money from a life insurance policy being paid to beneficiary?

My father passed and left a life insurance policy to me (his daughter); I'm using it to pay for his funeral. However, I also owe the IRS a big chunk of the money for the 2006 tax year. Can they take the whole amount or will the funeral home get their portion first and then the IRS? Can the IRS take it all?

Public Comments

1. Sure
2. No, the tax man cannot take money from any life insurance police. If you remember, when you last filled out your tax forms. Nowhere on the form did they(IRS) ask you about any life insurance. It is illegal for them to ask. The benefit you received is Income Tax Free. You might however, depending on the amount, incur some Estate Taxes.