Every year, U.S. persons are required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”), if the total amount of their foreign accounts exceed $10,000. Under current regulations, reportable foreign accounts include bank accounts, securities accounts, and certain other specified financial accounts (e.g., insurance accounts with cash values). See 31 C.F.R. § 1010.350(c).
On New Year’s Eve, however, the Financial Crimes Enforcement Network (“FinCEN”) announced its intent to broaden the list of reportable accounts to include virtual currency. Specifically, FinCEN issued a notice that provides:
Currently, the Report of Foreign Bank and Financial Accounts (FBAR) regulations do not define a foreign account holding virtual currency as a type of reportable account. (See 31 CFR 1010.350(c)). For that reason, at this time, a foreign account holding virtual currency is not reportable on the FBAR (unless it is a reportable account under 31 C.F.R. 1010.350 because it holds reportable assets besides virtual currency). However, FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account under 31 CFR 1010.350.
FinCEN Notice 2020-2.
U.S. persons with significant cryptocurrency and unresolved U.S. tax issues—such as unreported income from cryptocurrency transactions—should carefully consider whether it makes sense to come forward now to resolve their tax matters.
Other Insights of interest regarding virtual currency:
- Can You Go to Jail For Failing to Disclose Virtual Currency on a Tax Return or as Part of an Offer for a Collection Alternative?
- Frequently Asked Questions on Cryptocurrency Taxation
- IRS Assures Congress: Aggressive Enforcement Efforts are Ahead
Have Cryptocurrency or Blockchain issues or questions? Freeman Law is an innovative thought leader in the blockchain and cryptocurrency space. Blockchain and virtual currency activities take place in a rapidly evolving regulatory landscape. Freeman Law is dedicated to staying at the forefront as these emerging technologies continue to revolutionize social and economic activities. Contact Freeman Law to schedule a consultation or call (214) 984-3000 to discuss your cryptocurrency and blockchain technology concerns.