IRS Targets FTX While US Chamber Of Commerce Backs Coinbase

The taxmen are coming for the estate of Sam Bankman-Fried’s bankrupt FTX crypto exchange.

And they want the collapsed firm and its affiliates to pay up in a big way.

This, as court filings reveal that the United States Department of Treasury and Internal Revenue Service (IRS) have alleged that FTX and its various bankrupt subsidiaries collectively owe around $44 billion to the government in unpaid partnership taxes and payroll taxes.

The 45 separate claims being directed at the corpse of what was once the world’s third-largest cryptocurrency exchange range from just a few thousand dollars to tens of billions.

The single largest claim is one being leveled at Alameda Research LLC, FTX’s former sister trading firm, which also finds itself the subject of a separate liability for $7.9 billion.

Related: Bankman-Fried Wants Criminal Charges In FTX Case Dismissed

Paper Bird Inc., one of the shell companies incorporated and largely or wholly-owned by Bankman-Fried and used to transfer billions in “loans” to himself, is also facing a claim worth nearly $115 million.

There are also two additional claims together totaling $9.5 billion against Alameda Research Holdings Inc., a separate entity from the trading firm’s LLC.

While the tax bills themselves are staggering, the fact that the IRS has designated its claims under administrative priority is the real eye-catching part of the assessment.

This would mean that the IRS has pre-eminence in reclaiming funds over FTX’s unsecured creditors, including more than 1 million rank-and-file retail investors who all lost their hard-earned money to Bankman-Fried and his co-conspirators’ alleged crimes.

Still, the precedence of any competing claims will ultimately be decided by the federal judge overseeing the Delaware Court’s bankruptcy proceedings.

While Alameda Research, FTX, and many of the exchange’s key affiliates were headquartered outside of the U.S., the organization’s founders and key personnel, including Sam Bankman-Fried and Alameda Research CEO Caroline Ellison, are U.S. nationals.

As a nation, the U.S. uses a taxation-by-citizenship model which means that U.S. nationals are liable for taxes on their worldwide income no matter where they reside or the amount of time they spend on domestic soil per annum.

For partnership entities, taxes are generally passed through to the partners of the enterprise and then taxed at the individual level. That appears to be the situation with the outstanding claims from the IRS, as the agency has reclassified FTX’s employees and levied unpaid employer-side employment taxes against them.