- FTX is disputing the IRS’s $24 billion claim against it in bankruptcy, arguing the amount is implausibly high and more than 50 times FTX’s total earnings.
- FTX contends the IRS dismissed its tax returns prepared by Ernst & Young as lacking substantiation, raising doubts about the validity of the IRS’s calculations.
- FTX advocates nullifying the IRS’s claims to avoid legal battles that would stall bankruptcy proceedings and delay payouts to customers and creditors.
The bankrupt cryptocurrency exchange FTX is disputing the Internal Revenue Service’s massive $24 billion claim against the company, arguing that the amount is implausibly high.
The Backstory
Earlier this year, the IRS filed a claim totaling approximately $44 billion against FTX and its associated Alameda group of companies for unpaid taxes. This included a $20 billion claim for unpaid partnership taxes and millions more in unmet income and payroll taxes.
The IRS later revised its demand down to $24 billion. However, FTX asserts this is still an inflated, speculative figure not grounded in facts.
FTX’s Challenge
In its November 29 court filing, FTX contends the $24 billion claim is more than 50 times its total earnings, hundreds of times any plausible tax obligation, and exceeds the total value available to distribute to creditors.
FTX also revealed the IRS had dismissed tax returns prepared by accounting firm Ernst & Young as lacking substantiation. This raises doubts about the validity of the IRS’s calculations.
FTX advocates for the court to estimate the IRS claims at $0 to avoid lengthy legal battles that would stall bankruptcy proceedings and delay distributions to customers.
The company asserts nullifying the IRS claims is crucial to prevent derailing the progression of its bankruptcy case.
Conclusion
By fighting back against the IRS’s massive $24 billion claim, FTX aims to resolve issues quickly and ensure timely payouts to creditors and victims of its collapse. The coming court decision on this bold move will significantly impact the future of FTX’s lengthy bankruptcy proceedings.
