IRVINE, Calif., Jan. 13, 2021 /PRNewswire/ -- Previously, FinCen's and thus the Internal Revenue Service's (IRS) policy was to not consider foreign financial accounts that hold virtual currency as subject to foreign bank and financial account reporting (FBAR). After publicly reinforcing this unofficial policy more than once, FinCen recently signaled its intent to reverse its former policy on virtual currency. FinCen recently announced that it intends to propose amendments to the Bank Secrecy Act to include virtual currency as a type of reportable account under 31 CFR 1010.350.
On December 31, 2020, the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) moved to amend the Bank Secrecy Act's (BSA) FBAR regulations to "include virtual currency as a type of reportable account." However, this directly contradicts the memo dated January 20, 2020, from the Director of FinCEN to the Director of Tax Issues of the Government Accountability Office (GAO), that states that "FBAR regulations do not currently define virtual currencies in an offshore account as a type of reportable account."
If the above proposal is passed, money service businesses would be forced to report virtual currency transactions that occur in private or un-hosted wallets. This may raise some privacy concerns for users of virtual currencies who value the freedom that comes with trading these digital currencies. This proposal, like the reversal to FBAR reporting for virtual currencies, has also drawn the ire of lawmakers and taxpayers.
As you are likely aware, failing to report under FBAR regulations could result in thousands of dollars in fines for a taxpayer. In severe cases, the IRS may even propose criminal prosecution. If you are worried about how FinCen's changing view on virtual currency FBAR disclosure will impact your exposure for unreported offshore accounts and related unreported offshore taxable income, you should consult with our skilled International Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing. If you would like to schedule a confidential legal consultation to discuss whether you need to report your virtual currency, call us at (800) 681-1295. Our website could also offer information about scheduling your consultation.
See the full version of this article here.
Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]
SOURCE Tax Law Offices of David W. Klasing, PC