The of the United States of America (U.S.A.) unanimously rules in “a curious corner of the law” in the tax refund case has a massive economic significance.US Supreme Court unanimously rules in a ‘curious corner of law in the Tax Refund case has a Massive Economic Significance
In the case of Rodriguez v. Federal Deposit Insurance Corporation (FDIC), Justice Neil Gorsuch delivered a statement and said that this case is a strange case, which he calls “a curious corner of the law”.
The dispute arises from $4 million tax refund that the IRS gave United Western Bancorp, INC (UWBI), which is its subsidiary, United Western Bank (UWB) claims to belong to it. Subsequently, both the subsidiary and the parent company filed for bankruptcy. Now, in this case, Simon Rodriguez who is the trustee for the parent corporation i.e. United Western Bancorp, INC (UWBI), is now challenging the Federal Deposit Insurance Corporation (FDIC), the receiver for the bank, saying the $4 million belong to United Western Bancorp, INC’s (UWBI) estate.
The subject matter of the case pertains to a dispute between two affiliated corporations about the allocation of $4 million return on the calculated taxes. The issue raised in this case was which corporation was entitled to get the refund amount?
The court had the option to make use of a rule named Bob Richards rules wherein it determines how a consolidated corporate tax refund is distributed in bankruptcy cases. However, this principle is taken into consideration by only a few courts and is nowhere written into any congressionally approved statute.
The Supreme Court of the US resolves circuit splits on the question of law. Bob Richard’s rules were taken by the Supreme Court to decide this case. And so it was concluded that ‘Bob Richards rules, we hold, supplies no appropriate rule of decision which is only a cautionary tale about the limits of federal common lawmaking.’
