FTX bankruptcy judge plans hearing early next year to examine IRS tax recovery issues

Odaily News The federal judge in FTX’s bankruptcy case moved to end a long-running dispute between FTX and its largest creditor, a move that indicates the court may try to speed up efforts to recover customer funds from the bankrupt company FTX’s assets. U.S. Bankruptcy Court Judge John Dorsey of the District of Delaware plans to hold a hearing early next year to calculate the FTX exchange’s debt to the Internal Revenue Service (IRS), a difficulty that has hindered the payment of compensation to the exchange’s many victims. As FTX’s largest creditor, the IRS’s claims must be resolved before FTX’s victims can recover their losses. The judge said that while FTXs bankruptcy case was complex, it needed to be resolved more quickly. The goal of a bankruptcy case is to reach a conclusion as quickly and accurately as possible without wasting the time and resources of the state or other creditors. He warned that the IRS should not expect to recover huge amounts in taxes because there is currently no evidence of the exact amount debtors owe. (CoinDesk) Earlier news, FTX lawyers said in new documents submitted to the Delaware Bankruptcy Court that the IRS should substantiate its claims against FTX and show how it estimated the alleged back taxes due. The move is the latest development in a months-long dispute between the IRS and the FTX bankruptcy estate over the amount of unpaid taxes the bankrupt exchange and its affiliates owe the government. Although FTX claims it owes nothing to the IRS, the tax agency is seeking up to $24 billion in taxes, more than three times the amount the property is currently spending to try to recoup losses from creditors. During its brief three-year life, FTX never distributed dividends or earnings and never earned anywhere near the amount needed to support the IRS alleged $24 billion tax claim, the attorneys wrote. Instead, FTX lost significant amounts of money, they added. The IRSs only recourse is through taking damages from victims, ​​the attorneys argue in the filing. With no basis for a tax claim against the debtor, the IRSs reliance on its own procedures will only delay the recovery of true victims. Distribution of Injured Persons.”