IRS seeks $24 billion in taxes from FTX

FTX lawyers are appealing the ‘absurd’ demand by the IRS, according to which the exchange must settle a debt of $24 billion — three times the platform’s obligations to customers. This is stated in the motion.

Representatives of the exchange have sought information from the agency on the logic behind such calculations.

In April, the Internal Revenue Service planned to collect $44 billion, but six months later reduced the amount by almost half — it allegedly includes assessments for 2018 to 2022, according to Cointelegraph.

The IRS explained that the debt comprises unpaid income taxes, employment taxes and penalties owed by FTX and its affiliates. The figure is not final pending the audit.

The agency maintains that the estimates are based on the presumption of correctness, and the burden of proving the contrary lies with FTX. The exchange’s representatives called such statements ‘an Alice in Wonderland argument’.

FTX’s lawyers say the company has no obligations to the IRS. They called them ‘absurd and unfounded’, citing Ernst&Young’s answers to 2,300 IRS information requests and the provision of documents. Some of them are to be provided by January 15, 2024, according to the filing.

According to the statement, over a three-year period the organisation did not distribute dividends or profits and ‘did not earn anything that could come close to the sums supporting the government’s tax demands of $24 billion’. By contrast, FTX lost a huge amount of money.

“The only source of restitution for the state is the seizure of funds from victims. Since there are no grounds to bring any tax claims against the debtors, the IRS’s reliance on its own processes only serves to delay payments to those who were really harmed” — the document states.

The next hearing in the bankruptcy case will take place on December 13.

In October, representatives of creditors and FTX management approved a plan under which clients could expect to recover $9.2 billion by mid-2024.

In the same month, the exchange’s management began considering three options for restructuring the platform.

In the past year, about half of IRS cryptocurrency investigations have formed cases of tax nonpayment, whereas three years ago more than 90% were linked to money laundering.

In October, Kraken submit information to the agency about U.S. users who conducted transactions totaling over $20,000 between 2016 and 2020. The company will comply with the corresponding court order.