In the case of United States v. Randall, Trustee in Bankruptcy (1970), the Supreme Court was asked to determine whether a bankruptcy trustee could avoid federal tax liens on property that had been transferred by the bankrupt party prior to declaring bankruptcy. The court held that under Section 70c of the Bankruptcy Act, a trustee can only avoid such liens if they are invalid against certain creditors who extend credit without knowledge of them at a time when those liens were unrecorded or unsatisfied. In this particular case, it was found that all relevant tax lien statutes required recording and thus provided constructive notice to subsequent lenders about their existence. Therefore, since these statutory requirements were met and there was no actual controversy regarding their validity or priority over other claims against same properties involved here, it followed that these federal tax liens could not be avoided by trustee's powers under Section 70c.

In the dissenting opinion for United States v. Randall, Trustee in Bankruptcy (1970), it was argued that the majority's decision to allow a trustee in bankruptcy to avoid federal tax liens on property transferred by fraudulent conveyance was incorrect. The dissenting justices contended that this interpretation of Section 70, sub. e(1) of the Bankruptcy Act contradicted its legislative history and purpose, which they believed intended to protect secured creditors rather than unsecured ones like general bankruptcy trustees. They also pointed out that allowing such avoidance would result in an unfair distribution of assets among creditors and could potentially encourage fraud or collusion between debtors and trustees at the expense of other claimants including taxpayers whose interests are represented by federal tax liens.