This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
The case concerns a $4 million tax refund that the IRS paid to United Western Bank’s bankruptcy estate.
The refund must be delivered to the bank within ten business days after the IRS payment.
According to Petitioner, the dispute turns on whether courts should apply state law or the federal “Bob Richards” rule to decide ownership of the refund.
Background and question before the Court
According to Petitioner, the question presented is: what body of law should courts apply to determine ownership of consolidated tax refunds?
What each side argues
Petitioner Position
Petitioner argues that state law, which normally governs property‑rights disputes, should control the ownership of the tax refund.
Petitioner contends that the “Bob Richards” rule is not a valid rule of federal common law and should not be applied.
According to Mr. Reich, petitioner also argues that the government’s refusal to defend the Bob Richards rule should not prevent the Court from addressing the question.
Respondent (Government) Position
According to Petitioner, the government (FDIC) has historically advocated the Bob Richards rule, which presumes that the subsidiary whose losses generated the refund owns the refund.
The government maintains that an agreement must contain explicit language disavowing the Bob Richards rule in order for a court to depart from that presumption.
What happened at oral argument
Justice Ginsburg asked whether the government had abandoned the Bob Richards rule.
According to JUSTICE KAGAN, justice Kagan questioned why the Court should consider the Bob Richards rule at all, noting that both sides agreed it should not be dispositive.
Justice Sotomayor asked whether state law could trump a contract allocation of ownership under the Bob Richards rule.
Justice Sotomayor further asked whether a clear agency relationship in a contract would be altered by state law.
Justice Breyer inquired whether the issue had been argued in the lower courts.
According to JUSTICE BREYER, justice Breyer noted that the lower courts had considered Colorado case law.
Justice Kavanaugh asked whether the Court could deem the Bob Richards rule “not good law” and send the case back.
According to Justice Alito, justice Alito questioned whether the dispute was about general agency law, i.e., state law.
Justice Kavanaugh asked what would happen if IRS regulations conflicted with state law.
- [1] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 6
- [2] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 7
- [3] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 8
- [4] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 9
- [5] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 11
- [6] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 12
- [7] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 15
- [8] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 47
- [9] 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdf, p. 52
What the Court decided
Why it matters
The Court’s answer will determine whether the $4 million refund belongs to the bankruptcy estate under state property law or under the federal Bob Richards rule.
According to Petitioner, a ruling in favor of state law would reinforce the traditional role of states in governing property‑rights disputes, while a ruling for the Bob Richards rule would affirm a long‑standing federal common‑law presumption.
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 18c0c4979be81a0fcaea-r1-2d3c9def0f46f439.pdforal argument transcript
Guide generated September 27, 2026. Automated validation accepted this version.