FTX Challenges IRS's $24B Tax Demand, Asserts Zero Liability In Court Filing

Attorneys for the beleaguered cryptocurrency exchange FTX FTT/USD have contested the Internal Revenue Service's (IRS) claim of owing back taxes amounting to $24 billion, arguing that the IRS should substantiate its claims and clarify how it estimated the back taxes owed.

In a filing with the U.S. Bankruptcy Court for the District of Delaware, the exchange maintains that it owes nothing to the IRS, challenging the tax agency's demand, which significantly exceeds FTX's available resources for creditor reimbursement.

The exchange stated that FTX operated for approximately three years without distributing dividends or earnings, and reported substantial losses.

The company's attorneys emphasized that FTX's financial history does not support the IRS's claims for such a substantial tax liability. They argued that the IRS's process only delays distributions to victims of the FTX fraud.

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The lawyers also contended that the United States made no effort to justify the IRS's original demand of $43 billion, nor its current claim of $24 billion. They emphasized that the U.S. provided no rationale for any potential additional prepetition tax liability for FTX, especially not for amounts as substantial and unfounded as those claimed by the IRS.

The attorneys argued that the IRS's claims, alleging the debtors owe taxes significantly higher than any income ever earned by them, are unfounded and exaggerated. Additionally, they stated that the situation would unjustly hinder most of FTX's creditors, who are already victims of fraud, from receiving any substantial recovery.

"It just makes no sense that a company that lost many billions of dollars would have a substantial tax liability, much less one for $24 billion," the FTX lawyers said.

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