Attorney-at-Law

YES, IT IS ABOUT THE MONEY, MONEY, MONEY

In Uncategorized on 06/27/2017 at 16:57

Notwithstanding the words of Jessie J, Dr. Luke, Claude Kelly and B.o.B. from their 2011 hit “Price Tag,” it is about the money, and IRS wants to amend its petition to claim judicial estoppel against Moneygram International, Inc. and Subsidiaries, et al., Docket No. 12231-12, filed 6/27/17.

Y’all will remember Moneygram, having been stomped in Tax Court back in January, 2015, took the Fifth (that is, the United States Court of Appeals for the Fifth Circuit), and scored a per. cur. remand back to Judge Lauber.

And if you didn’t remember, see my blogpost “Maybe You Can Bank On It,” 2/15/17.

Well, aside from giving discounts (which doesn’t mean what most people think it means, when you’re dealing with banks), the question remains whether Moneygram and the subs make loans to their agents, the floggers of Moneygram’s payment instruments, when the agents get money but don’t forward same to MoneyGram forthwith.

Banks make loans, and Moneygram needs to be a bank to get $82 million of Section 581 offsetting capital losses. Moneygram charges no interest, but banks don’t have to charge interest to be banks (although find me a bank that will lend me money at no interest, please).

Now judicial estoppel means that you took one position in a litigation and now want to backtrack when it suits you. Judge Lauber lets IRS amend, claiming Moneygram knew for three years that IRS would take the position that Moneygram wanted it both ways, and amendment is liberal if no prejudice. There are no disputed facts.

If Moneygram made loans to agents by letting them hang onto Moneygram’s money, the relationship between Moneygram and agents is creditor-debtor.

But here’s the kicker: “Respondent contends that petitioner has successfully argued in other courts, including bankruptcy courts, that it has a fiduciary relationship, not a debtor-creditor relationship, with its agents. Respondent wishes to amend his answer to assert judicial estoppel as an affirmative defense.” Order, at pp. 1-2. Neither Tax Court nor Fifth Cir. had considered this before now.

It’s pretty obvious when you think about it. If an agent is holding Moneygram’s cash, and if the cash is a loan, should the agent tank and file Chapter, Moneygram is just another unsecured general creditor, likely to get a scanty serving of cold bortscht when the goodies are doled out. But if the agents are trustees or fiduciaries, the cash always belongs to Moneygram and hands-off to the creditors, secured, unsecured or otherwise.

This is not a tangential issue. Banks make discounts, but they also make loans without discounting commercial paper.

Should be interesting reading when this all sorts out…if they don’t settle.

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