IRVINE, Calif., January 13, 2021 / PRNewswire / – So far, the policy of FinCen, and hence the Internal Revenue Service (IRS), has been to exclude foreign financial accounts containing virtual currency from being the subject of overseas banking and financial account (FBAR) reporting. After publicly affirming this unofficial policy more than once, FinCen recently announced its intention to reverse its previous policy on virtual currency. FinCen recently announced that it intends to propose changes to the Banking Secrecy Act to include virtual currency as a type of reportable account under 31 CFR 1010.350.
On December 31, 2020The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has decided to amend the FBAR provisions of the Bank Secrecy Act (BSA) to “include virtual currencies as a type of reportable account”. However, this directly contradicts the memo of January 20, 2020From the director of FinCEN to the director of taxation for the Government Accountability Office (GAO) it says, “FBAR regulations do not currently define virtual currencies on an offshore account as a type of reportable account.”
If the above proposal is adopted, money service providers would be forced to report virtual currency transactions that take place in private or non-hosted wallets. This can raise some privacy concerns for virtual currency users who value the freedom that comes with trading these digital currencies. This proposal, like the reversal of FBAR coverage for virtual currencies, has drawn the ire of lawmakers and taxpayers.
As you probably know, failing to report under FBAR regulations could result in fines of thousands of dollars for a taxpayer. In severe cases, the IRS may even propose prosecution. If you are concerned about how FinCen’s changing view of FBAR disclosure in virtual currencies will affect your exposure to unreported offshore accounts and related unreported offshore taxable income, you should contact our qualified international Tax attorneys and CPAs at the Tax Law Offices of applying David W. Class. To arrange confidential legal advice to discuss whether you need to report your virtual currency, call us at (800) 681-1295. You can also find information on planning your consultation on our website.
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Public contact: Dave Klasing Esq. MS-Tax CPA, [email protected]
SOURCE Tax Law Offices of David W. Klasing, PC