Vaughn v. United States

Whether the minimum required culpability state for denying a bankruptcy debtor a discharge of a tax debt based on the debtor's participation in a disallowed tax shelter, and spending decisions in light of a known or potential tax debt is: (1) negligence (i.e., the debtor should have known better than to participate in the tax shelter or spend money on something other than a present or potential future tax bill), per the analysis of several circuits including the Tenth Circuit in In re Vaughn; (2) specific intent (i.e., the debtor must specifically intend for his spending to defeat the IRS's ability to collect a tax debt), per the Ninth Circuit's analysis in Hawkins v. Franchise Tax Board; (3) the mental state of knowingly (i.e., the debtor knows it is practically certain that his spending will put money beyond the reach of the IRS's collection efforts), in conformity with this Court's decisions equating willfulness with knowledge; or (4) some other mental state.