In the upcoming months, the U.S. Treasury and the IRS will be defending regulations aimed at curbing what they deem abusive tax practices, such as the economic substance doctrine, the Corporate Transparency Act and the moratorium on employee retention tax credits. Concurrently, the U.S. Supreme Court will review a case involving a defunct transportation company that impacts federal tax and bankruptcy laws.

In a July 5, 2024, article, Law360 reviewed the key federal cases to watch for the remainder of the year. Gray Reed Partner Joshua Smeltzer was among the experts interviewed, providing insights on cases involving a moratorium on employee retention credits. Board Certified in Tax Law by the Texas Board of Legal Specialization, Joshua uses his experience as a former litigator for the U.S. Department of Justice to defend clients in tax audits, tax appeals, and litigation in Federal District Court, U.S. Tax Court, the U.S. Court of Federal Claims, and tax issues in U.S. Bankruptcy Court.

Excerpt:

The Tenth Circuit upheld a district court ruling and bankruptcy court ruling that found the government was not protected from certain suits brought by unsecured creditors. But the government said there is a circuit split on the matter, such as the Seventh Circuit saying that the plain language of the bankruptcy law forces a trustee to show that an actual creditor could use a state’s applicable law to recoup payment to the IRS.

The overlap between the tax collection and bankruptcy laws makes the case interesting, according to Joshua Smeltzer, a partner at Gray Reed. The way the IRS administers its collection and lien activities “ends up getting kind of strange when you get into the bankruptcy context,” such as the agency itself has a completely separate area that is dedicated only to the processing of bankruptcy claims, Smeltzer told Law360.

Bankruptcy actions aim to “provide orderly relief to businesses in trouble,” which is in contrast with the IRS, charged with essentially collecting as much taxes that are due, he said.

Read the full article here.