Law360 Quotes Victor Jaramillo on Reporting Bitcoin for FBAR Filings
Taxpayers facing this ambiguity — along with the fast approaching April 17 deadline for filing FBAR and other tax forms — should play it safe and include offshore cryptocurrency accounts in their reports, said Victor Jaramillo, who is of counsel at Caplin & Drysdale. He said taxpayers could land in hot water for not reporting virtual currency accounts that they think might qualify for an FBAR, but there’s little downside to disclosing them.
“I’ve never heard of anybody getting a penalty for filing an FBAR when they shouldn’t,” Jaramillo said.
. . .
As Jaramillo put it, a digital wallet is no different from a wallet that sits in someone’s pocket. While he couldn’t see such an account as reportable on an FBAR, exchanges were a different story.
“I think it’s pretty clear that if you have an account in an exchange and if that exchange is located overseas, then I’d be hard pressed to think why you’re not reporting that on an FBAR if it meets the $10,000 threshold,” said Jaramillo, referring to the minimum foreign account amount that triggers the reporting requirement.
. . .
Jaramillo pointed to the John Doe summons that the IRS has served virtual currency exchanger Coinbase Inc. to investigate whether the company’s customers avoided paying taxes on transactions made through the company.
Coinbase is a domestic company, but if the agency initiates a summons on a foreign exchange, “does that get you into the 50 percent penalty land on the voluntary disclosure program?” Jaramillo wondered.
. . .
“There’s a privacy aspect to it,” Jaramillo said. “You would be triggering knowledge in the government that you have such accounts, so maybe they would audit you and start looking for any capital gains.”
For the full article, please visit Law360’s website (subscription required).
Excerpt taken from the article “Play It Safe In Reporting Bitcoin On FBAR, Specialists Say” by Natalie Olivo for Law360.