📰 New High‑Court Ruling: What United States v. Miller Means for You
📰 New High‑Court Ruling: What United States v. Miller Means for You
On March 26, 2025, the U.S. Supreme Court issued a new ruling in United States v. Miller, 145 S. Ct. 839. It confirms that while bankruptcy trustees can act under Section 544(b), they cannot recover payments made to the federal government if no private creditor could have done so under state law—because sovereign immunity still applies harvardlawreview.org+1nelsonmullins.com+1oyez.org+8faegredrinker.com+8nelsonmullins.com+8.
🛡️ What This Ruling Means for You
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Federal tax payments you made before filing are likely safe from being clawed back, even if state law allows a look-back longer than two years.
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Trustees must now rely on federal law (like Section 548, which has a 2-year limit) when challenging payments to the government — state-law claims no longer apply reuters.com+1reuters.com+1.
👩⚖️ Roles & Impacts
| Role | What the Miller Ruling Means |
|---|---|
| Debtors | ✅ Peace of mind — tax payments are protected from clawbacks. |
| Creditors | ⚠️ Less to recover—fewer estate assets if funds went to the IRS. |
| Trustees/Lawyers | ⚖️ Must use federal statutes (e.g., §548), not state law via §544(b). |
✅ Bottom Line
Miller limits trustee authority: state-law-based avoidances against federal agencies are blocked by sovereign immunity. The only path forward now is through federal law. Ensure your payment timing and intent are well-documented for clarity.
1. Case Background & Supreme Court Decision
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All Resort Group paid $145,000 in federal taxes pre-bankruptcy to cover shareholders’ liabilities.
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Trustee Miller tried to undo the payment using Utah’s fraudulent-transfer law via §544(b).
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The Supreme Court ruled that although §106(a) waives immunity for trustee claims, it does not waive immunity for the underlying state-law cause of action reuters.comreuters.com+9faegredrinker.com+9supreme.justia.com+9en.wikipedia.org+4supreme.justia.com+4reuters.com+4.
2. Legal Reasoning Behind the Ruling
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The Court held that waivers of sovereign immunity are jurisdictional, not substantive—§106(a) empowers courts to hear trustee claims but doesn’t create new rights to sue the government under state law faegredrinker.com+2supreme.justia.com+2calawyers.org+2.
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Since no private creditor could have sued the government under Utah law, the trustee cannot either under §544(b) harvardlawreview.org+12nelsonmullins.com+12supreme.justia.com+12.