FTX Debtors Challenge IRS Over Whopping $24 Billion Tax Claim

cryptonews.com:

Debtors of FTX have raised concerns over the Internal Revenue Service’s (IRS) claim of $24 billion in taxes, warning that it could impede the return of customer funds. 

In a  filing submitted  on Sunday, the debtors argued that their earnings were nowhere near the amount claimed by the IRS, and instead, they incurred substantial losses.

“These cases present a zero-sum game,” lawyers representing the bankrupt exchange stated.

“The only source of recovery for the IRS is by taking recoveries away from victims. As there is no basis to assert any tax claim against the Debtors, the IRS’s reliance on its own processes only serves to delay distributions to those truly injured.”

Initially, the IRS alleged claims of $43 billion but revised it to $24 billion. 

FTX’s debtors contested that the IRS failed to provide a basis for its claims, and the US previously stated that the IRS’s claims “are not subject to estimation.” 

Consequently, the burden falls on the FTX debtors to disprove the claims, which could take several months to resolve.

“These cases should not be delayed by an IRS process that is akin to determining whether a shipwreck sits at 1,000 feet or 3,000 feet below sea level. The import is the same—the ship is underwater,” the lawyers further asserted.

Ernst & Young (EY) recorded FTX’s loss at $11 billion, a figure reportedly reflected on the tax returns.

Although the FTX debtors have been cooperating with the IRS and providing requested documents, they argue that an additional lengthy fact discovery period is unnecessary since the IRS has been evaluating the tax issues for months.

Resolution of the IRS’s claims is crucial for the progress of the bankruptcy proceedings. 

As per the proposed schedule, an