This article is a follow up to “Dealing with Virtual Currency? Taxation, Reporting FBARs, and FATCA Worries,” which appeared in the January 2015 Tax Stringer.

As the title suggests, there remains an open question as to whether virtual currency accounts, hosted wallet services and vault services located abroad may trigger FBAR filing requirements. Based on case law and the probability of FinCEN deciding to treat virtual currency the same as money, it appears likely that the FBAR filing requirements applicable to monetary accounts will also be applied to accounts funded with virtual currency.

Generally, one way the Bank Secrecy Act (BSA) protects against laundering money through foreign financial institutions is to require United States persons (a term that includes natural persons, most legal entities, and trusts and estates) to file Foreign Bank and Financial Accounts Reports (FBARs), Form 114 (the most recent version released on September 30, 2013 available at http://bsaefiling.fincen.treas.gov/main.html). FinCEN and the IRS work in conjunction to ensure that FBARs are filed. Although the IRS has the authority to examine and enforce FBAR filings, the FBAR filing requirement is not a tax filing. Click here to read the full article.