Smith v. SIPI, LLC (In Re Smith)

TINDER, Circuit Judge.

It stands to reason that people facing bankruptcy might also have tax problems, so federal courts often apply the bankruptcy statutes in tandem with other sources of tax law. This case presents a puzzling tension between the bankruptcy fraudulent transfer statute, 11 U.S.C. § 548, and Illinois law on the “tax sale” of a debtor’s property.

Section 548 allows debtors to avoid certain transfers of their property to creditors, but only for a limited time after those transfers are “perfected” against a “bona fide purchaser” (“BFP”). 11 U.S.C. § 548(d)(1). Under the Illinois…