IRS Climbing a Steep Hill in Bankruptcy Trustee Clawback Dispute

The IRS has a bumpy road ahead in a US Supreme Court case against a bankruptcy trustee after multiple justices appeared skeptical of its argument that it should be able to keep payments that a transportation company made before filing for bankruptcy.

The case, United States v. Miller, tasks the high court with determining whether the agency’s sovereign immunity affords it special bankruptcy law privileges. The case also pits state laws against bankruptcy trustees’ authority to claw back funds that a company paid more than two years before a bankruptcy that aren’t already waived by federal law.

During oral ...