More Trouble? U.S. IRS Demands $44B From FTX Over Unpaid Taxes

The US Department of Treasury and Internal Revenue Service (IRS) has filed a claim worth over $44 billion against bankrupt crypto exchange FTX and its subsidiaries. In the filing released on Wednesday, the American tax collectors laid 45 claims against FTX, with the majority of the financial claims against Alameda Research, the exchange’s sister company.

According to the filing, the IRS wants a recourse from FTX companies, including the exchange’s legal entity, West Realm Shires, Ledger Holdings, and Blockfolio. Alameda Research LLC received the highest claims, getting two sets of tax bills worth $20.4 billion and $7.9 billion in partnership and payroll taxes. Alameda’s subsidiary, Alameda Research Holdings Inc., also got a $9.5 billion claim.

Although there has not been any complaint from the IRS about tax siphoned by FTX and Alameda Research, the exchange has accumulated over $44 billion in outstanding claims. The figures brought forward by the IRS also coincide with the records held in  FTX’s claims agent, Kroll’s Restructuring Administration practice.

Tax-by-citizenship US System

Although Alameda Research is based in Hong Kong, it is still liable to pay taxes to the United States because of the taxation-by-citizenship system used by the country. FTX and Alameda Research’s coordinators, Caroline Ellison and Sam Bankman-Fried, are both American citizens and, as such, are still taxable irrespective of country of residence and amount of time spent in the US.

Partnership taxes are also not paid to the US by partnership entities; they are brought down to individuals and paid as personal income tax to the IRS.

IRS Filed Claims Under Admin Priority

The filing also showed that the IRS submitted the claims under the administrative priority section of the bankruptcy proceeding, meaning that the FTX bankruptcy would attend to its tax bills before the unsecured creditors. Unsecured creditors include regular FTX customers who lost funds to the platform’s bankruptcy.

Furthermore, the claim pressures FTX as it seeks to clear its debt from available capital and further its reopening plans. The exchange had recovered $5.5 billion in liquid assets earlier in January, which, with other additions, prompted the bankruptcy restructuring team to consider restarting the business.