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Reporting Foreign Assets

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When in Doubt, File the FBAR. The Penalties are too High to Take a Risk.

A United States person that has a financial interest in or signature authority over foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. U.S. persons, include U.S. citizens, resident aliens, trusts, estates, and other domestic entities. The FBAR is due on the due date of the individual’s or domestic entity’s income tax return, including extensions.

The reporting requirements have increased and the penalties for failure to report continue to be harsh. Not all foreign holdings must be reported. If, for example, you hold stock in a foreign company through a U.S. broker, those holdings do not have to be separately reported.

A recent development is whether Bitcoin (or other cryptocurrency) wallets or account holders are subject to FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), reporting. In the Hom case, the court upheld $40,000 in penalties against a taxpayer for failure to report online gambling accounts. [1] An article in The Contemporary Tax Journal from San Jose State University found similarities between the online poker account and Bitcoin accounts and concluded that these are foreign financial accounts that should be reported. [2] Most commentators are giving similar advice…when in doubt, file the FBAR. The penalties are too high to take a risk.

Feel free to contact us If you have any questions regarding potential foreign asset reporting requirements.

 


[1] U.S. v. Hom (June 4, 2014) U.S. District Court, N.D. California, Case No. 3:13-cv-03721

[2] Kiadeh, Arash, “When Should Bitcoin be Subject to FBAR” (February 12, 2016)

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