FTX Trading Ltd, the legal name for Sam Bankman-Fried's collapsed crypto exchange FTX, is seeking to significantly reduce its tax debt to the United States Internal Revenue Service.

The move is another installment in the months-long saga between the beleaguered exchange and the country's tax collection agency. FTX aims to pay the IRS a $200 million priority tax claim and a $685 million subordinated claim, according to the June 3 legal filing.

The FTX Debtors, who are managing the company during its bankruptcy, argue that the IRS has wrongly included misappropriated funds from Sam Bankman-Fried and other tax liabilities in their calculations.

"...[T]he Debtors vigorously dispute the IRS Claims in many crucial respects including, among other things, income tax liability for so-called …