No Bitcoin Reporting for 2014 FBARS
The IRS recently notified taxpayers that for 2014 it will not require taxpayers to include Bitcoin transactions in a Form 114, Report of Foreign Bank and Financial Accounts (FBAR). But the IRS issued this advice with a caveat. An IRS representative stated that this position could change in the future as the IRS continues to analyze how it will treat virtual currency like Bitcoin.
Taxpayers who have foreign financial accounts with an aggregate value of $10,000 or more must file an FBAR. The form must be filed electronically to the Treasury Department’s Financial Crimes Enforcement Network. The IRS will still be in charge of audits and enforcement when it comes to foreign income and assets.
Taxpayers who own virtual currency are off the hook in 2014, but may not be so in subsequent years. An IRS official said, “At this time, FinCEN has said Bitcoin is not reportable on the FBAR, at least for this filing season.” He went on to say that virtual currency will continue to be scrutinized. The IRS realizes that virtual currencies like Bitcoin are ushering in a new world. As an IRS Director in the Criminal Investigation division stated regarding virtual currency, “It’s the wave of the future that’s here today and the IRS is looking at ways we can stop abuses.”
If you have virtual currency holdings such as Bitcoin and want to discuss your options and tax strategies for future tax years, schedule your free consultation by calling (480) 888-7111 [or submit a web request here].