In a major development, the Internal Revenue Service (IRS) has filed claims against FTX Group worth over $40 billion in unpaid taxes. This has thrown a spanner in the works for the beleaguered company, which was hoping to re-open for business after filing for bankruptcy. This article will discuss the implications of this development and what it means for the future of FTX Group.
The IRS’s claims against FTX Group are unprecedented in scale, dwarfing any prior claims filed by creditors. While it was believed that the 50 biggest creditors were owed around $3 billion cumulatively, the IRS claims total around $44 billion. This has put into question FTX’s plans to re-open for business, given the sheer amount owed to the U.S. government. Furthermore, according to U.S. legal precedent, any claims by unsecured creditors can only be compensated after the U.S. government gets paid off.
Unpaid Employment Taxes
The claims filed by the IRS mainly pertain to unpaid employer-side employment taxes. The IRS reclassified FTX Group personnel as employees following an investigation, resulting in a massive tax bill. The largest claim is worth a staggering $20.4 billion, followed by another one worth over $7 billion and two worth over $2 billion each. The remaining 41 claims make up the remaining $13 billion. Although the exact breakdown of the tax filings is unavailable for most of these claims, a leaked document showcasing the biggest one has been circulating online.
The problem with this development is that the tax claims by the U.S. government take priority over any claims by unsecured creditors. This means that the $20 billion tax bill must be paid before any money can flow from Alameda to FTX Intl. This has jeopardized the company’s future, given the sheer scale of the unpaid taxes.
For the moment, these claims have not been discussed in court, at least not publicly. Given the highly publicized nature of the court case, it remains to be seen how lawyers for the IRS will choose to pursue these claims. However, U.S. legal precedent is clear that the U.S. government’s claims take priority over any claims by unsecured creditors.
Future of FTX Group
The implications of the IRS’s claims against FTX Group are significant. Given the massive tax bill owed to the U.S. government, it is uncertain whether the company will be able to re-open for business. Moreover, the IRS claims have questioned the company’s financial position, given the previously manageable amount owed to creditors. The next steps for FTX Group will depend on how the IRS chooses to pursue these claims and whether the company can come up with a viable plan to pay off the taxes owed.