The confusion concerning the role of State law in the Section 6901 transferee liability extravaganza goes on unabated.

Judge Lauber denies a two-week-old summary J motion from Red River Ventures I, L.P., Docket No., 3030-14 filed 7/6/15. And he does it without even waiting for a reply from IRS.

A real quick-kick, this.

And Judge Lauber’s reasoning?

After the usual bow to “movant has burden and non-movant gets all the breaks,” here’s the punchline.

“This case appears to involve an ‘intermediary company’ (or ‘Midco’) transaction that may be substantially similar to transactions described in IRS Notice 2001-16. Upon careful review of the parties’ filings to date, and viewing the facts and the inferences drawn from them in the light most favorable to respondent as the nonmoving party, we conclude that there are genuine disputes of material fact that preclude summary judgment. Important factual issues in this case may include the actual or constructive knowledge of petitioner, its principals, and its advisors; such issues are rarely, if ever, susceptible to resolution by summary judgment.” Order, at p. 1.

Now, does the subjective intent, or actual or constructive knowledge, of the transferee, against whom liability is asserted under State law, have anything to do with liability? It seems Wisconsin says no (see my blogpost “Gude Faith, He Maun Fa’ That,” 6/22/15, as Sandy Shockley comes unglued under Badger State law), but I don’t know that Texas really answers the question, and the Red River boys are in the Lone Star State.

Y’all recollect Richard H. Cullifer, the star of my blogpost “Cullifer’s Travails,” 10/8/14? Judge Laro found that Cullifer knowingly made the deal to defeat, delay and hinder IRS, especially since his trusty lawyer, Board-certified tax guru Robert Thomas, Esq., sent a bunch of warning shots in Richard’s direction.

But what if he hadn’t? What if Cullifer was a true innocent, unwarned by diligent and honest counsel, and inveigled into a scheme from a wily but superficially aboveboard fraud merchant?

More to the point, why is transferee’s state of mind relevant? Doesn’t the Uniform Voidable Transactions Act (or Uniform Fraudulent Transfers Act, although “fraudulent” may well be a misnomer) look to protect the creditor?

The ostensible taxpayer was stripped of assets, leaving the IRS to whistle for the taxes properly due on account of the strip. The stripper fled; and the Red River boys were sitting with some of the loot from the strip.

Of course, knowledge may go to mitigate or abate penalties. I doubt, however, that the penalty issue is what Judge Lauber is dealing with here.

Any Texas lawyers want to weigh in here?