Already dealing with bankruptcy and legal issues, crypto exchange FTX has been hit with an unexpected setback—a massive $24 billion tax bill issued by the Internal Revenue Service (IRS) for the United States.
The IRS delivered the massive tax demand to FTX, which is currently navigating the aftermath of bankruptcy and working hard to recover assets to restore customer funds.
According to recent filings, the IRS filed initial proofs of claim totaling around $44 billion on April 27 and 28, 2023.
The IRS amended some claims on November 2, 2023, lowering amounts for the tax years 2022 and 2023. However, the unsubstantiated estimated claims against FTX remain in the $24 billion range.
FTX has filed a motion with the US Bankruptcy Court to dismiss all tax claims in preparation for a legal battle with the IRS.
The filing claims that the IRS’s large tax bill “bears no relationship to reality” and criticizes the lack of a rational explanation for the claims.
The FTX debtors claim that the tax bill will make it difficult to reimburse customers for lost funds. The $24 billion tax bill is one of the largest ever issued by the IRS and exceeds FTX’s earnings and customer debts.
The filing goes on to say, “The claims asserted by the IRS threaten to halt the Debtors’ progress and any distribution to customers and other creditors indefinitely based on estimates the IRS has not explained after many months of discussion and increasingly urgent requests.”
FTX debtors have officially requested that the Delaware bankruptcy court set up a schedule and framework for estimating the IRS’s claims.
The purpose of the exchange is to secure the dismissal of the tax claims, either with a valuation of $0.00 fees or an alternative amount determined during trial.
FTX revealed ongoing cooperation with IRS audit teams in its motion to dismiss the IRS tax claims, responding to approximately 1,100 requests to provide clarity and verify the accuracy of the $24 billion tax claims.
