The Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN) will jointly examine application of foreign account reporting requirements to virtual currency held in an offshore account under the Bank Secrecy Act (the notorious FBAR, Form 114). Two important points about FBAR duties for foreign accounts holding virtual currency were made in a letter dated January 22 2020, from the Director of FinCEN to the Director of Tax Issues of the Government Accountability Office (GAO).
First, FinCEN agreed with the recent GAO suggestion that FinCEN and the Internal Revenue Service should work together and provide a statement to the public about FBAR reporting duties for virtual currency held in an offshore account. Thus, we can expect some action on this point in the not too distant future.
Second, and of great importance for the FBAR filing required this year, FinCEN also stated: “Currently the FBAR regulations do not define virtual currency held in an offshore account as a type of reportable account. For this reason, at this time, virtual currency held in an offshore account is not reportable on the FBAR.”
Good to know! But keep this on your radar as one never knows if and when the FBAR regulations will be changed to mandate FBAR reporting for such accounts.
You can find FinCEN’s letter of January 22, 2020 in Appendix III of the Government Accountability Office report Virtual Currencies: Additional Information Reporting and Clarified Guidance Could Improve Tax Compliance issued on February 12, 2020.
Posted: February 16, 2020
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