High Court to Hear Bankruptcy Case Over IRS Sovereign Immunity

The US Supreme Court agreed to hear the government’s case challenging a bankruptcy trustee’s clawback of a payment to the Internal Revenue Service that the trustee said was a fraudulent transfer.

The US Solicitor General argued that the US Court of Appeals for the Tenth Circuit incorrectly interpreted the US Bankruptcy Code when it affirmed a ruling finding a Chapter 7 liquidating trustee could recover a $145,000 payment to the IRS for “personal tax debts.” The government said the agency is protected by sovereign immunity against the clawback of that payment, which was made by transportation company ...