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Bankrupt crypto exchange FTX has reportedly reached a tentative agreement with its largest creditor, the United States Internal Revenue Service (IRS). The settlement pertains to a $24 billion tax dispute that has loomed over the exchange.
Originally, the IRS claimed that FTX owed $44 billion in taxes, but this amount was later reduced. The proposed settlement, contingent upon court approval of FTX’s reorganization plan, outlines key terms between the exchange and the tax authority.
As per the agreement, the IRS would resolve its $24-billion claim by receiving $200 million as a priority tax claim, to be paid within 60 days of the plan’s approval. Additionally, the IRS would collect $685 million as a subordinated claim, which would be fulfilled after payments to customers and other creditors.
The settlement covers all tax claims until October 31, 2022. FTX sees this agreement as a means to mitigate litigation risks and enhance certainty regarding creditor and customer recovery. The exchange asserts that the outcome of potential legal proceedings would be uncertain, citing novel and complex tax law issues raised by the IRS claims.
In the filing, FTX does not dispute owing taxes but disagrees with the assessed amount and specific reasons for tax liability. The exchange argues against being taxed on funds allegedly misappropriated by its former CEO, Sam Bankman-Fried, and contests the IRS’ calculations for employment taxes related to executive salaries.
Moreover, FTX claims valid deductions and losses that the IRS allegedly disallowed due to insufficient documentation. The tax authority, however, maintains its stance and was prepared to pursue significant tax liability in the absence of a settlement.
FTX unveiled a new plan on May 8 to repay creditors, aiming for full reimbursement of all claims plus additional compensation. The proposed plan indicates that only creditors with claims below $50,000 would be eligible for a 118% recovery, covering approximately 98% of FTX’s creditors by number. Repayments would be based on asset values at the time of FTX’s collapse in November 2022.
The post <a href="https://www.unlock-bc.com/124157/ftx-nears-resolution-irs-settles-24-billion-tax-dispute-for-200-million/" rel="noopener noreferrer nofollow">FTX Nears Resolution: IRS Settles $24 Billion Tax Dispute for $200 Million</a> appeared first on <a href="https://www.unlock-bc.com" rel="noopener noreferrer nofollow">UNLOCK Blockchain</a>.

FTX Nears Resolution: IRS Settles $24 Billion Tax Dispute for $200 Million

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