By Scott Grossman (May 23, 2018, 3:16 PM EDT) -- Sovereign immunity cannot shield the IRS from a bankruptcy trustee's fraudulent transfer suit based on state law, Judge Marci McIvor of the United States Bankruptcy Court for the Eastern District of Michigan held on April 18, 2018, in McClarty v. Hatchett.[1] Even though sovereign immunity would generally bar creditors from suing the IRS under state fraudulent transfer laws, Congress abrogated sovereign immunity for Bankruptcy Code Section 544 claims that incorporate applicable state fraudulent transfer laws. Thus, as long as the trustee can identify at least one creditor that (but for sovereign immunity) could have brought a fraudulent transfer claim against the IRS, a bankruptcy trustee can bring such a claim....