The U.S. Internal Revenue Service (IRS) claims $4.4 billion in taxes from FTX, prioritizing claims over disaster victims.

The U.S. Internal Revenue Service (IRS) is seeking $44 billion in taxes from FTX, invoking "administrative priority" to assert its tax claim ahead of unsecured creditors. This claim amount is multiples of the total debt owed. How will this be settled?

IRS Claims $44 Billion in Taxes from FTX

The Internal Revenue Service (IRS) of the United States filed tax claims worth $44 billion against FTX and its related entities on April 27 and 28. The IRS is seeking around $20 billion in partnership taxes, as well as withholding and payroll taxes from Alameda Research.

According to the claims document by restructuring platform Kroll, the IRS's main targets include:

• Blockfolio
• FTX Lend
• FTX Trading
• FTX Ventures
• FTX US Trading
• FTX US Services
• FTX Marketplace
• FTX Digital Assets
• Alameda Research
• FTX Property Holdings

Ledger Holdings, the parent company of LedgerX which was previously sold for $50 million, is also listed in the IRS tax claims.

IRS Tax Estimates for Alameda

Legal professional Twitter account @MeatTC_ commented that based on details from Alameda Research's data, the IRS has reclassified all employees from contractors to employees and is collecting unpaid employer-side payroll taxes from them.

As Alameda Research is likely a partnership for tax purposes, these unpaid taxes are being assessed at the partnership level, but depending on the terms of the partnership agreement, they may pass the tax liability to the partners. Given the substantial amount, @MeatTC_ suggests that all employees may be presumed to be domestic employees and have not paid employment taxes, possibly related to fees and consultant expenses.

IRS Claims Take Priority Over Creditors

To the disadvantage of retail creditors, the IRS has filed tax claims under "administrative priority," meaning the $44 billion in tax claims will take precedence over other creditors in bankruptcy reorganization proceedings.

Cointelegraph notes that although Alameda Research is based in Hong Kong, its founder SBF and CEO Caroline Ellison are U.S. citizens, thus subject to the U.S. citizenship-based taxation system.

IRS Taxing FTX: Significant Challenges Remain for Tax Compliance

Legal professional Twitter account @MeatTC_ commented that these tax issues highlight the challenges of tax compliance in the cryptocurrency industry.

Cryptocurrency companies often operate in legal gray areas, making tax calculations more difficult and complex. Additionally, many cryptocurrency exchanges and companies typically overlook tax filing and compliance issues in their early operations, leading to more severe tax problems today.

These tax issues could have a significant impact on the cryptocurrency industry, especially as government agencies increase regulatory enforcement and crack down on tax evasion. Therefore, cryptocurrency companies need to enhance tax compliance measures and mitigate future tax risks as much as possible.