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ASU Law Talks

Death, taxes and zombies: Is the tax code ready for the undead?

Two of life’s certainties are death and taxes.

But what happens when death is no longer certain?

Nearly 15 years ago, I set out to answer what I considered a glaring omission in the academic literature: Will you be considered dead for estate tax purposes if you die and come back as a zombie? Because, if not, there are certain tax planning opportunities for the well advised.

As I dug into that question, I realized that the zombie apocalypse would also raise income tax issues. Perhaps more important, similar questions might arise for vampires and other undead creatures. The result was “Death and Taxes and Zombies,” published in the Iowa Law Review. My article examined the tax consequences of the coming zombie apocalypse and urged Congress and the IRS to act before it is too late.

They have yet to do so.

With Halloween upon us, it seems an appropriate time to revisit this important issue. I am also increasingly concerned that young people no longer read law review articles. I would hate for this knowledge to disappear precisely when humanity needs it most and have therefore recorded the material as a lecture, meant to reach a broader audience.

*Note that the coming AI apocalypse presents a completely different set of tax questions and may be the subject of a future article.

How will the tax code apply when the dead rise?

Imagine that the dead begin walking the earth and feasting upon the living. The government will presumably need significant resources to protect those of us who remain alive. Armies, after all, like to get paid. At the same time, a substantial portion of the taxpaying population will suddenly be dead, or possibly undead. You can see the fiscal problem.

The word “zombie” appears nowhere in the Internal Revenue Code, leaving us with two fundamental questions:

Are zombies dead for estate tax purposes?
If zombies aren’t dead, or aren’t entirely dead, are they subject to the income tax?

Before we can answer those questions, however, we need some facts. As any lawyer knows, facts matter.

Popular culture has given us a bewildering variety of zombies. Some result from viruses, radiation or fungi. Some people die before becoming zombies, while others transition directly from human to zombie without experiencing a clear mortality event. Consider The Walking Dead versus The Last of Us. Those are very different factual circumstances, and they could lead to very different tax consequences.

When, legally speaking, are you dead?

The estate tax applies to the estate of a “decedent.” You might expect the Internal Revenue Code to define decedent, but it does not.

Typically, one becomes a decedent when one dies, but, again, the tax code is silent on the question of when one dies. Instead, we must look to state law for the definition of death. But zombies (and vampires) present certain challenges to traditional measures, such as heart and brain function.

They also raise an even more interesting question: Is the zombie who emerges after death the same legal person who died?

Suppose you die and immediately come back. Most of us would probably agree that a patient whose heart temporarily stops on an operating table and is revived remains the same person. But what if you return after three days? Three years? Seventy-five years? And what if you come back altered in some fundamental way?

As science advances, the line separating life and death has become increasingly complicated. Cryonics could bring Walt Disney or Ted Williams back at any moment (allegedly). Will they still be considered dead? Can they get a refund of any estate taxes their estates may have paid? The return of the living dead, as it were, simply allows us to push that problem to its logical extreme.

Are the undead still liable for income taxes?

Estate taxes are only the beginning. Suppose a self-motivated zombie remains legally alive and earns income. In principle, that zombie should owe income tax. This may sound strange, but we already impose taxes on entities that aren’t alive. We call them corporations.

The greater challenge is administration. Many zombies are unlikely to understand that they need to file a Form 1040. Zombie-prepared tax returns are also likely to contain significant errors. And I would not want to be the IRS agent assigned to collect delinquent taxes from a brain-eating taxpayer.

This creates a classic tax-policy problem: the difference between what an ideal tax system says we should tax and what we can realistically administer.

Of course, vampires are another matter entirely. Unlike most zombies, vampires appear perfectly capable of understanding and complying with the tax code. They also tend to be wealthy. They have castles. They have servants. Indeed, they have to work at night, so they’ll make time and half or even double time!

Exempting vampires from income tax could result in substantial lost federal revenue while creating a powerful incentive for wealthy taxpayers to pursue vampirism as an estate-planning strategy.

Which leads to an important principle for future tax legislation: Not all undead are created equal, which means we might need to create different laws for different kinds of undead, which could raise difficult line-drawing problems. What precisely is the difference between a zombie, a vampire, and a mummy?

How can ridiculous questions reveal serious problems about the law?

There is obviously some fun in all of this.

The idea for my original article came while I was attending a tax conference in Denver. I saw an Occupy Denver march approaching from one direction and a zombie walk coming from another. The groups collided, leaving people carrying “End the Fed” signs intermingled with people staggering around demanding brains.

The question just popped into my head: If someone dies and comes back as a zombie, are they dead for estate tax purposes? That question became a law review article that went viral, just not that kind of viral thankfully.

I am far more of a tax nerd than a zombie nerd. Writing it required me to research zombie mythology and watch films like Zombieland and Shaun of the Dead. For perhaps the only time in my academic career, I could sit on the couch watching zombie movies and truthfully tell my family that I was doing research.

But absurd hypotheticals can serve a serious purpose.

Law is filled with categories that appear straightforward until we encounter facts lawmakers never anticipated. What constitutes death? What makes someone the same legal person? When should theoretically taxable income be exempt because enforcement is impractical?

Zombies allow us to test those boundaries and reveal unstated assumptions and holes in the law. More importantly, it allows us to do so without the prior commitments that might be associated with a real-world example.

That kind of thinking is part of what law professors do. We take rules written for one set of circumstances, introduce a new or unexpected fact pattern and ask whether the rules still produce sensible results, all in the interests of improving our laws.

Sometimes the hypothetical involves emerging technology or a new business model.

Sometimes it involves the walking dead.

Is Congress running out of time?

Nearly 15 years after I first raised the alarm, neither Congress nor the IRS has adequately prepared the tax system for the undead.

If an apocalypse occurs, the remaining IRS employees will have more pressing matters to consider than whether a zombie qualifies for a stepped-up basis. Developing thoughtful guidance while their former colleagues are chewing on the doors may prove difficult.

We should address these questions now, while we still have time. Until then, remember the basics this Halloween:

Zombies: aim for the head.
Vampires: stake through the heart.
Werewolves: Silver bullet.
Taxes: consult a professional.

Good luck and stay safe out there, and always remember to double-tap.

Read the original research: Adam Chodorow, “Death and Taxes and Zombies,” Iowa Law Review.