In the spring of 2026, a nurse in Eldorado, southeast of Santa Fe, opens a demand letter from a Chapter 7 trustee. It wants back the $90,000 her mother gave her in 2018 toward a house. Her mother filed bankruptcy in February, nearly eight years after the gift. New Mexico gives creditors four years, she thought. The trustee’s answer fits in three letters: IRS.
Trustees call it the golden creditor theory. The trustee borrows the IRS’s ten-year collection window and turns it on private transferees. United States v. Miller is often read as a loss for trustees. On this question it changed less than people assume.
Did United States v. Miller decide whether a trustee can use the IRS to reach back ten years?
No. Miller, 604 U.S. ___ (2025), decided 8 to 1 on March 26, 2025, involved company funds a Utah company’s principals spent on their own income taxes. The trustee sued the United States under 11 U.S.C. § 544(b) to get them back. The Court held that the waiver in 11 U.S.C. § 106(a) “applies only to the §544(b) claim itself and not to any state-law claims nested within that federal claim,” reversing In re All Resort Group, Inc., 71 F.4th 1247 (10th Cir. 2023).
The opinion never mentions 26 U.S.C. § 6502 or a trustee using the IRS’s claim against someone else. Footnote 1 says only that trustees chasing older transfers “will ordinarily bring a §544(b) action” and point to state law “with a longer lookback period.” The ten-year question is not reserved; it is absent.
How does the IRS as triggering creditor stretch a New Mexico clawback to ten years?
Section 544(b)(1) lets a trustee avoid a transfer “voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502.” The triggering creditor would normally sue under New Mexico’s Uniform Voidable Transactions Act, and NMSA 1978, § 56-10-23 extinguishes the claim after four years (for actual intent under § 56-10-18(A)(1), one year after discovery if later).
The IRS is different. 26 U.S.C. § 6502(a)(1) lets it sue “within 10 years after the assessment,” free of state limits. In United States v. Holmes, 727 F.3d 1230 (10th Cir. 2013), the government recovered 1995 to 2002 distributions to a Colorado company’s sole shareholder in a 2008 suit, counting from the company’s assessments. An unpublished New Mexico appeal, United States v. Spence (10th Cir. Nov. 15, 2000), did the same with land deeded to a sham church and then a son in the 1980s. The trustee’s pitch: if the IRS could have sued you, so can I.
Trustee Reaching Back Past Four Years? Contact Us Now
Does In re Vaughan Company Realtors still protect New Mexico transferees?
It is this district’s only decision, and it went against the trustee. In Wagner v. Ultima Homes, Inc. (In re Vaughan Co., Realtors), 498 B.R. 297 (Bankr. D.N.M. 2013), the trustee of Douglas Vaughan’s Ponzi company sought about $501,849 paid in 2005 to the builder of his house; the petition came in 2010. Judge Jacobvitz refused to lend her the IRS’s ten years. He did “not believe that Congress, by enacting Section 544(b), intended to vest sovereign powers in a bankruptcy trustee,” and because the IRS appears in so many cases, the theory “would eviscerate the UFTA’s four-year look back period in most bankruptcy cases.”
Most courts read § 544(b) literally and side with trustees, including Kaiser (Bankr. N.D. Ill. 2014) and Zagaroli (Bankr. W.D.N.C. 2020). In Kansas, also within the Tenth Circuit, Williamson v. Smith (In re Smith) (Bankr. D. Kan. June 2, 2022) declined to follow Vaughan while sharing its policy worries. In re Kossoff PLLC, 667 B.R. 405 (Bankr. S.D.N.Y. 2025), accepted the IRS as triggering creditor and was on appeal to the Second Circuit (No. 26-229) as of February 2026. I found no Tenth Circuit or Tenth Circuit BAP ruling on the question, before or since Miller, and no later D.N.M. opinion revisiting Vaughan.
Does Miller’s “no new cause of action” reasoning help New Mexico transferees?
It offers an argument. Miller relied on § 106(a)(5), which says the waiver does not “create any substantive claim for relief or cause of action not otherwise existing,” and on the rule that a trustee takes the actual creditor as it stood. A transferee can say bankruptcy likewise should not hand a trustee a sovereign privilege no private creditor has.
The reply is stronger. Section 106 governs suits against governmental units, and a nurse in Eldorado is not one. Nothing new is created when the IRS really could have sued her within ten years of assessment, as Holmes shows. The shoes carry advantages as well as disabilities, and the weight of authority favors trustees. I would raise the Miller point to preserve it, not to carry a case.
Who in New Mexico is exposed when the IRS is the triggering creditor?
Anyone who took money or property from someone who later owed the IRS, starting with adult children who got a parent’s “gifts.” An LLC member who took distributions in 2019 while company taxes went unpaid sits where the shareholder in Holmes sat; the firm’s post on clawing back LLC distributions covers the state-law side. A bought-out partner is exposed too, though a fair price is a strong answer.
Churches get special treatment. Section 544(b)(2) bars state-law attacks on an individual’s gifts of cash or financial instruments that 11 U.S.C. § 548(a)(2) protects, meaning gifts within 15 percent of gross annual income or consistent with past giving. That protects ordinary tithes from constructive-fraud claims, but not business donations or schemes like Spence.
What must a trustee prove to borrow the IRS’s ten years, and what defenses work?
Start with the predicate claim. In In re J&M Sales Inc. (Bankr. D. Del. Feb. 22, 2022), no proof of claim meant “it is not an allowable claim,” though § 501(c) lets the debtor or trustee file one. The assessment must have been timely and the ten years open on the petition date. A prior bankruptcy pauses the clock under § 6503(h). An installment agreement in effect does not, but a pending request or offer does under § 6331(k). A filed lien adds no time, because § 6322 keeps it alive only while the liability is enforceable.
Timing at the transfer matters too. The insolvency provision, § 56-10-19, protects only creditors whose claims predate the transfer; § 56-10-18 also reaches later ones. Hillen v. City of Many Trees (In re CVAH, Inc.), 570 B.R. 816 (Bankr. D. Idaho 2017), held the IRS’s claim arises when the tax accrues, not at assessment. Kossoff held a lien release did not prove the tax was gone.
On the merits, good faith plus reasonably equivalent value defeats an actual-intent claim under § 56-10-22(A), and value given earns a credit under subsection (D). Intent must be pleaded under Rule 9(b), the subject of the firm’s post on what a trustee must plead. And 11 U.S.C. § 546(a) generally gives the trustee two years after the order for relief to sue.
How would a ten-year clawback play out for a Santa Fe family?
Illustration only. A Santa Fe interior designer gives her daughter $90,000 on March 12, 2018, and deeds a rental condo to her son on September 4, 2018. Auditing her 2017 and 2018 returns, the IRS assesses $140,000 on June 14, 2021 (assume timely). With the tax unpaid, she files Chapter 7 on February 2, 2026, and the IRS files a claim.
Section 548 reaches back only to February 2, 2024, and a private creditor’s four years ended in 2022; the recorded deed undercuts discovery arguments. Borrowing the IRS, the trustee points to a collection window open on the petition date and running to June 14, 2031. The majority view puts both transfers in play; Vaughan puts neither. The 2017 tax predates both transfers, but the 2018 tax accrued at year-end, so for that slice only § 56-10-18 theories work. The children’s real fight is whether their mother was insolvent in 2018. The trustee must sue by February 2, 2028.
| Route | How far back | What the trustee must show | Main defenses |
|---|---|---|---|
| 11 U.S.C. § 548 | 2 years before the petition | Actual intent, or too little value plus insolvency or similar | Good faith and value (§ 548(c)) |
| NM UVTA actual intent, § 56-10-18(A)(1) | 4 years, or 1 year after discovery if later | A private creditor; intent pleaded under Rule 9(b) | Good faith and reasonably equivalent value (§ 56-10-22(A)) |
| NM UVTA constructive, §§ 56-10-18(A)(2), 56-10-19 | 4 years, no discovery rule | No reasonably equivalent value plus insolvency or similar | Value given; § 544(b)(2) for qualifying charitable gifts |
| IRS as triggering creditor, 26 U.S.C. § 6502 | 10 years from assessment | Allowable IRS claim, timely assessment, period open at filing, plus a UVTA claim | Vaughan; no proof of claim; expired period; merits |
Frequently Asked Questions
Did the Supreme Court in Miller end the IRS golden creditor theory?
No. Miller held only that a trustee cannot use § 544(b) and state law to recover a payment made to the IRS itself. It never mentions § 6502.
Must a New Mexico bankruptcy judge follow In re Vaughan?
No. One bankruptcy judge’s decision persuades others but does not bind them. Vaughan is still the only D.N.M. ruling, and the Tenth Circuit has not spoken.
Can a trustee use the IRS’s ten years if the IRS never filed a claim?
Not in the Delaware court that decided J&M Sales, which required a proof of claim. The debtor or trustee can file one for the IRS, though.
Does an IRS installment agreement stop the ten-year clock?
Not while it is in effect. A pending installment request, a pending offer in compromise or an earlier bankruptcy case does suspend it.
Are tithes paid to a New Mexico church at risk?
Mostly not. An individual’s gifts within 15 percent of gross annual income, or consistent with past giving, are protected from constructive-fraud claims. Gifts made to hide money from creditors are not.
How North Star Law Firm Can Help
North Star Law Firm defends transferees in clawback actions and advises Chapter 7 debtors on what a trustee may pursue. Because the predicate is a tax claim, the firm also tests assessment and collection dates through its tax defense practice.
Phillip Zagotti, JD/CPA, is admitted to the U.S. District Court and Bankruptcy Court for the District of New Mexico and represents taxpayers before the IRS and the U.S. Tax Court. The firm works alongside New Mexico-licensed counsel on state-law questions. If a trustee wants back money you received more than four years ago, contact North Star Law Firm.