In the 1961 case Simonson, Trustee in Bankruptcy, et al. v. Granquist, District Director of Internal Revenue, et al., the U.S Supreme Court was tasked with determining whether a trustee in bankruptcy could recover taxes paid by an insolvent corporation prior to its declaration of bankruptcy. The corporation had made payments on its federal income and excess profits tax liability after it became insolvent but before filing for bankruptcy. After becoming trustee following the company's declared bankruptcy, Simonson sued to recover these payments as voidable preferences under Section 60(a) of the Bankruptcy Act - which allows trustees to reclaim any transfer that enables creditors (in this case IRS) to receive more than they would have in a liquidation scenario under Chapter VII. The court ruled against Simonson stating that such tax payments were not "transfers" within meaning of section 60a and thus cannot be reclaimed by trustees from IRS as voidable preference.

The dissenting opinion in the case of Simonson, Trustee in Bankruptcy, et al. v. Granquist, District Director of Internal Revenue, et al., argued that the majority's decision was a departure from established principles governing bankruptcy proceedings and tax law. The dissent contended that under existing laws and precedents, taxes due to be paid by a bankrupt estate should not be given priority over other claims unless explicitly stated by Congress - which it had not been in this instance. Furthermore, they disagreed with the majority's interpretation of "excise" taxes as including income taxes owed by an insolvent corporation before its bankruptcy filing date; arguing instead for a narrower definition limited to transaction-based levies such as sales or use taxes. They also expressed concern about potential negative impacts on future bankruptcy cases if creditors were deterred from lending because their claims could be subordinated to those of taxing authorities without clear legislative mandate.