Shiv Telegram Media reports IRS lawsuit against FDIC regarding Silicon Valley Banks $1.4 billion tax debt
2 min read
Title: IRS Files Lawsuit Against FDIC Over $1.45 Billion Tax Debt Owed by Failed Silicon Valley Bank
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The U.S. Internal Revenue Service (IRS) has taken legal action against the Federal Deposit Insurance Corporation (FDIC) regarding a staggering $1.45 billion tax debt owed by the defunct Silicon Valley Bank (SVB). SVB’s collapse in March 2023 marked one of the largest bank failures in American history, leading to a series of legal battles.
As the receiver for SVB, the FDIC denied the IRS’s entire tax claim. This denial prompted the IRS to seek judicial intervention to challenge the denial and determine the veracity and extent of the tax liability.
Not only is the IRS embroiled in litigation with the FDIC, but SVB Financial, the bank’s former parent company, has also initiated legal proceedings. The FDIC’s seizure of $1.93 billion in cash during SVB’s takeover has prompted SVB Financial to sue the FDIC, asserting that the funds should be returned as promised to “fully backstop all deposits” at the bank. Conversely, the FDIC maintains that the cash can be utilized to cover the expenses incurred in rescuing the failed bank.
Initially, the IRS had estimated the tax debt owed by SVB spanning the years 2020 to 2023 to be approximately $1.45 billion. However, upon further examination, it was discovered that some employment taxes included in the claim had already been paid.
Both the IRS and the FDIC have refrained from commenting on the ongoing dispute.
This high-stakes legal battle between the IRS, FDIC, and SVB Financial highlights the significant financial implications of SVB’s collapse. The outcome of this case will not only determine the validity and magnitude of the tax debt but also establish precedent for future similar cases involving failed banks and their obligations to creditors.
As this legal saga unfolds, industry experts and financial stakeholders eagerly await the court’s decision, which has the potential to reshape regulatory practices and shed light on the intricate relationship between failed banks, government agencies, and tax liabilities.
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