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Daily Tax Report: State

Court Decision ‘Extremely Problematic’ for Tax Collectors: Judge (1)

Dec. 2, 2019, 10:47 PMUpdated: Dec. 2, 2019, 11:22 PM

A decision giving an IRS claim priority in bankruptcy proceedings threatens federal, state, and local corporate tax collectors, a Delaware judge said.

The statement came in a Dec. 2 recommendation to withdraw the case from a referral for mediation and to go forward with the U.S. District Court for the District of Delaware’s appeals process.

The U.S. Bankruptcy Court for the District of Delaware’s October opinion arose out of a dispute about how to prioritize an IRS claim of $857,000 in taxes, interest, and penalties based on corporate income taxes for the 2015 tax year—a “Straddle Tax...

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