FTX wants to pay the IRS $200 million instead of $24 billion in tax liabilities
Quick Take
- FTX argued in bankruptcy court that it owes significantly less than the IRS claimed.
- FTX is not responsible for Bankman-Fried’s misappropriated customer funds, the firm argued.
- The case’s objection deadline is June 17 and its hearing date is June 25, 2024.
FTX Trading Ltd, the legal name for Sam Bankman-Fried's collapsed crypto exchange FTX, is seeking to significantly reduce its tax debt to the United States Internal Revenue Service.
The move is another installment in the months-long saga between the beleaguered exchange and the country's tax collection agency. FTX aims to pay the IRS a $200 million priority tax claim and a $685 million subordinated claim, according to the June 3 legal filing.
The FTX Debtors, who are managing the company during its bankruptcy, argue that the IRS has wrongly included misappropriated funds from Sam Bankman-Fried and other tax liabilities in their calculations.
"...[T]he Debtors vigorously dispute the IRS Claims in many crucial respects including, among other things, income tax liability for so-called 'misappropriation income' as a result of Sam Bankman-Fried’s theft of FTX customer funds, employment tax liability for purported compensation paid to Mr. Bankman-Fried and other former principals of the Debtors, and the proposed disallowance of a large amount of deductions and losses for lack of substantiation," according to the filing.
The IRS disagrees with the Debtors' arguments and plans to seek significant tax liabilities if no settlement is reached. The objection deadline for the case is June 17, and the hearing date is June 25, 2024.
Previously, the IRS claimed that FTX owed $44 billion in taxes but later reduced the amount to $24 billion. FTX has argued that the IRS's $24 billion tax demand would delay customers from getting their money back, The Block previously reported.
A priority tax claim, such as taxes, is a payment that must be made before other debts, while a subordinated claim is paid only after higher-priority obligations are fulfilled.
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