A more thorough explanation:

Definition: Transferee liability refers to the responsibility of the person who receives an asset or property to pay any taxes owed by the person who transferred the asset or property. This liability is limited to the value of the asset transferred. For example, if someone gives a gift to another person and cannot pay the gift tax, the Internal Revenue Service (IRS) can force the recipient to pay it instead.

Examples:

• John sells his car to Jane but fails to pay the required sales tax. The state revenue department can hold Jane responsible for paying the tax since she is the transferee of the car.
• Tom inherits a house from his grandfather, but his grandfather owed property taxes at the time of his death. Tom is responsible for paying the outstanding property taxes as the transferee of the house.

These examples illustrate how transferee liability works. In both cases, the person who received the asset (Jane and Tom) is held responsible for paying the taxes owed by the person who transferred the asset (John and Tom's grandfather). The liability is limited to the value of the asset transferred, so Jane is only responsible for the sales tax on the car, and Tom is only responsible for the property taxes on the house.