FTX Bankruptcy Sees $44 Billion Claims from U.S. Internal Revenue Service
The US Internal Revenue Service (IRS) has filed tax claims worth a staggering $44 billion against bankrupt crypto exchange FTX and its affiliated entities.
According to recent bankruptcy filings, the IRS has put forth a total of 45 claims against FTX companies related to unpaid taxes which could be a major concern for FTX creditors given that the agency is claiming priority over creditors in the bankruptcy case.
The largest of the claims include a whopping $20.4 billion and $7.9 billion pair of claims aimed at FTX sister firm Alameda Research related to unpaid partnership taxes.
Another two claims totaling $9.5 billion are made against Alameda Research Holdings Inc.
The IRS filed the claims under “administrative priority,” which enables its claims to supersede that of unsecured creditors during bankruptcy proceedings.
Although Alameda Research was based in Hong Kong, its key executives and employees, such as Sam Bankman-Fried and Caroline Ellison, are American citizens.
The US differs from most other countries in that it practices a taxation-by-citizenship system, meaning that citizens of the United States are required to pay taxes on their income earned anywhere in the world, regardless of their place of residence or how long they spend in the United States each year.
In the case of partnership entities like Alameda Research, taxes are not paid at the partnership level. Instead, they are passed through to the partners and subject to taxation at the individual level.
"Tax man does get paid 1st in a BK which is why it is filed under an Admin Priority status," said Twitter user @MrPurple_DJ, who describes himself as a restructuring expert.
The user said that the claims are usually inflated in a bankruptcy case but they "settle
Read more on cryptonews.com
