Is Bitcoin & Other Crypto Required to be on the FBAR?
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Is Bitcoin & Other Cryptocurrency Reported on the FBAR
Is Bitcoin & Other Crypto Required to be on the FBAR: In the past few years, the Internal Revenue Service has significantly increased the enforcement of cryptocurrency related transactions. Some US taxpayers may receive a letter 6173 or 6174 as well — which are essentially soft letters that recommend the taxpayer to get into crypto compliance if they have not done so already. Another issue involving cryptocurrency is whether or not crypto such as Bitcoin is reportable on the FBAR. While there is no set guidelines just yet, recently published FinCEN (Financial Crimes Enforcement Network) notice 2020- 2 suggests that the US government will move to require offshore cryptocurrency to be reported on the FBAR.
FinCEN Notice 2020-2
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Report of Foreign Bank and Financial Accounts (FBAR)
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Filing Requirement for Virtual Currency FinCEN Notice 2020-2
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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).
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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.
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FBAR Amnesty Programs Explained
If you are out of compliance for reporting crypto and other accounts in prior years, the IRS developed various Amnesty Programs are programs to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
FBAR Reporting Continues to Expand
In conclusion, the Internal Revenue Service and Financial Crimes Enforcement Network both continue to expand the reporting requirements for foreign accounts. with the recent surge and popularity of cryptocurrency, as well as the recent inclusion of a cryptocurrency question directly on Page 1 of the 1040, it is probably just a matter of time before the US government requires overseas cryptocurrency to be reported on the FBAR.
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