Simon Fraser, a member of Cozen O’Connor’s Bankruptcy, Insolvency & Restructuring Practice Group, discusses Oregon’s bankruptcy court tax claim in the American Bankruptcy Institute Journal. Given the impact of the recession, Simon explains that many states sought out new revenue sources through enforcement and debt collection efforts, but may face constitutional limits on the state’s ability to impose tax liability over its borders. He explains that “The U.S. Bankruptcy Court for the District of Delaware recently discussed these limits in In re Washington Mutual Inc. and disallowed a claim asserted by the Oregon Department of Revenue (DOR) seeking to impose a corporate excise tax of approximately $29.3 million on the bankruptcy debtor, Washington Mutual Inc.” Ultimately the court found that “an insufficient nexus existed between the debtor and the state of Oregon, and therefore disallowed the DOR’s claim as unconstitutional pursuant to both the Due Process Clause of the Fourteenth Amendment and the Commerce Clause.”
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