Virtual currency has long since exceeded the point that everyone thought it was a novelty for risky entrepreneurs. Serious investors are now buying and keeping virtual currency, and conversations have intensified about the routine use of virtual currency for everyday exchanges.
The IRS has increased its enforcement efforts in regards to virtual currencies, and they are continuing to fine tune their policies to ensure that all taxpayers meet their tax obligations for this virtual money. Most recently, the Financial Crimes Enforcement Network, or FinCEN, announced that it would be seeking to change regulations to better enforce taxes on foreign accounts containing virtual currencies.
In the FinCEN Notice 2020-2, the agency announces that it plans to propose to amend the Bank Secrecy Act (BSA), which regulates the reporting of financial accounts held in other countries. Specifically, it will seek to hold a taxpayer accountable for foreign accounts that contain virtual currency. The current Act requires these accounts to be reported only if they also contain other reportable assets. However, if the account holds virtual currency and nothing else, taxpayers are not currently legally obligated to report these accounts on the Report of Foreign Bank and Financial Accounts, or FBAR.
No information was included in the notice about when the agency expects to submit its proposal for changes or when it might hope to have the changes enacted.
The notice should put taxpayers on guard, however, if they have foreign accounts containing virtual currencies. They should start working with a tax professional to make appropriate plans for reporting the income, as well as making preparations for paying taxes on those accounts. Once these changes are implemented, failing to report or pay taxes on this income will result in steep fines and potentially even criminal charges.
Silver Law is ready to help those who are already facing such charges or penalties related to their reporting on foreign accounts or virtual currencies. Our attorneys represent clients in civil and criminal tax litigation, audits, foreign tax reporting cases, and more. We will help you explore all your legal options to reduce your tax obligation and the penalties you are facing. All our attorneys have worked for the IRS, and they have extensive experience representing clients on such cases. Call us today to schedule a consultation with a tax attorney in Arizona to learn more about your legal rights and options.
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Scottsdale, AZ 85254
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410 South Rampart Blvd, Suite 390
Las Vegas, Nevada 89145
Office: 702-318-7130
Email: lchapman@silverlawplc.com
Website: taxcontroversy.com
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