FTX CHALLENGES IRS’S $24 BILLION TAX CLAIM IN BANKRUPTCY COURT
The legal dispute between FTX and the IRS over a $24 billion tax claim has taken a new turn with FTX's legal team contesting the amount in a submission to a Delaware bankruptcy court. The attorneys argue that the IRS's claim is excessive and baseless, stating that FTX never earned amounts anywhere near the $24 billion claimed by the tax authority. FTX's operational history, which spans only three years, is characterized by substantial financial losses rather than significant earnings or dividends.
FTX's legal team highlights the potential negative impact on the creditors and victims of the bankruptcy if the IRS's demand is met. They stress the need for a fair resolution that prioritizes compensating those affected by FTX's collapse. The filing suggests that complying with the IRS's claim could reduce recoveries for the victims.
The IRS's claim against FTX has seen fluctuations, starting at $44 billion and later adjusting to $43 billion before settling at $24 billion. The claim encompasses income taxes, employment taxes, and penalties for the years 2018 to 2022. FTX and accounting firm EY have cooperated extensively with the IRS, responding to over 2,300 information requests and providing most of the requested documents. The IRS maintains the presumptive correctness of its tax estimations, placing the burden of proof on FTX to demonstrate otherwise.
FTX's submission emphasizes the urgency of establishing a schedule for resolving the disputes to avoid further delays in compensating the bankruptcy's victims. The next court hearing on the FTX bankruptcy case is set for December 13. The outcome of this legal battle will play a crucial role in determining how the remaining assets of FTX are distributed, following the cryptocurrency exchange's bankruptcy filing in November of the previous year and the subsequent conviction of its former CEO, Sam Bankman-Fried, for defrauding users and investors.
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