Silicon Valley Bank’s Successor Sues IRS Over $41.3 Million Bill

Silicon Valley Bank’s successor entities are fighting about $41.3 million in tax adjustments made by the IRS for the years leading up to the bank’s 2023 failure and bankruptcy.

SVB Financial Trust, the successor-in-interest and liquidating trust for New York-based SVB Financial Group, petitioned the US Tax Court after the IRS gave notice of adjustments to multiple line items for the bank’s taxes from 2020 through 2022.

The IRS initially assessed almost $645 million in additional taxes to Silicon Valley Bank when it notified the trust of its adjustments to the bank’s taxes in June 2024, the trust said in its petition filed April 1. But about $600 million in additional tax assessed for 2022 is no longer in dispute, according to the petition, which was served Thursday.

The trust contests the IRS assertion that it owes another $14.6 million in taxes for 2020 and $26.7 million for 2021 because a significant part of those deficiencies relate to disallowed tax deductions for restructuring expenses that came with the acquisition of Boston Private Financial Holdings Inc., according to the petition.

The 2020 adjustments also come after the IRS determined SVB hasn’t substantiated some charitable deductions, as well as the long-term capital loss on liquidation of partnership interest, which triggered a capital gains tax. The IRS also disallowed tax credits for research activities under IRC Section 41.

Based on these determinations, the IRS revised upward the bank’s taxable income by $45.6 million and $24 million for 2020 and 2021, the petition states. SVB Financial Trust says it should be entitled to a tax credit of $64.5 million and is seeking a determination of no tax deficiencies from the Tax Court.

The IRS initially also revised the bank’s 2022 income upward by $9.3 billion, causing it to assess another $605 million in additional tax for that year, according to and IRS determination filed along with the petition. But while the two parties reached “an agreement and stipulation” that no deficiency will be assessed, the IRS has not revised its notice to reflect that it is no longer pursuing that additional tax, SVB Financial Trust says.

Silicon Valley Bank, once a favorite for technology investors and startups that had as much as $200 billion in assets, filed Chapter 11 bankruptcy in March 2023, as rising interest rates forced it to sell its $21 billion bond portfolio at a $1.8 billion loss, triggering a bank run. The bank emerged from bankruptcy in November with the liquidating trust, SVB Financial Trust, taking effect.

Years of litigation have followed. In January the Federal Deposit Insurance Corp. sued about a dozen former bank executives for “egregious mismanagement” that led to its demise. The FDIC stepped in to backstop customer accounts.

In March, a judge in the US District Court for the Northern District of California ruled SVB and its successor entities can sue the FDIC for $1.93 billion that it seized following the bankruptcy.

The IRS didn’t respond to a request for comment.

Sullivan & Cromwell LLP is representing SVB.

The case is SVB Financial Trust v. Commissioner, T.C., No. 4076-25, petition served 4/24/25.