Prepare to Pay Taxes on Crypto Held in Foreign Accounts

David Dobbins
February 25, 2020

The Government Accountability Office (GAO), a U.S. Congress watchdog, published a report evaluating the IRS’s approach to regulating virtual currency (crypto) and the guidance it has offered the public.

The GAO’s Recommendation

However, a portion of the report was directed at the IRS and the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department..

To date, the IRS and FinCEN have not clarified whether or not the requirements for reporting financial assets held in foreign countries apply to virtual currencies.

The GAO recommended that FinCEN and the IRS clarify if foreign asset reporting laws apply to virtual currency and how they apply.

IRS and FinCEN respond

The IRS disagreed with the GAO’s recommendation, stating that it’s premature to address virtual currency foreign reporting.

However, FinCEN agreed with the GAO’s recommendation. According to FinCEN director Kenneth Blanco, “FinCEN will coordinate with the IRS to determine the best approach to provide clarity to the public regarding the application of the Report of Foreign Bank and Financial Accounts to virtual currency. Currently, the FBAR regulations do not define virtual currency held in an offshore account as a type of reportable account.”

The GAO also recommended that FinCEN share more information about applying foreign account reporting requirements under the BSA. FinCEN agreed to this recommendation as well.

Experts believe that clarifying these requirements would improve compliance and make it less likely that taxpayers will file reports that are not legally required.

Treasury Secretary Echoes the GAO

Treasury Secretary Steven Mnuchin’s recent statements on crypto echo the GAO recommendations. Mnuchin told the Senate Finance Committee that FinCEN is preparing “significant new requirements” around cryptocurrencies and we’ll “be seeing a lot of work coming out very quickly.”

“We want to make sure that technology moves forward but, on the other hand, we want to make sure that cryptocurrencies aren’t used for the equivalent of old Swiss secret number bank accounts,” Mnuchin said.

Is your business prepared for this change?

Take Action

Find out how Sovos can help your business pay taxes on crypto held in foreign accounts.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

David Dobbins

Content Marketing Manager
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

EMEA VAT & Fiscal Reporting
September 20, 2021
Fiscal Representation Post-Brexit – Requirements for UK Companies Trading in the EU

Non-EU companies are required to appoint a Fiscal Representative in order to be registered for VAT in many Member States. Following the end of the Brexit transition agreement on 31 December 2021, this was a consideration for UK companies who wanted to remain registered or had to register as a result of changes to supply […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
September 16, 2021
French E-invoicing Mandate Update: Government Revises Rollout Schedule

When the French Tax Authority published its report last fall, unveiling the continuous transaction control (CTC) plans for France, we questioned whether it would be possible to finalise all the details of this system in less than a year, to allow sufficient time for businesses to adapt. Although the French Treasury (DGFiP) has made good […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
September 16, 2021
Saudi Arabia’s E-Invoicing Mandate is Fast Approaching

The Zakat, Tax and Customs Authority (ZATCA) announced the finalised rules for the Saudi Arabia e-invoicing system earlier this year, announcing plans for two main phases for the new e-invoicing system. The first phase of the Saudi Arabia e-invoicing system is set to go live from 4 December 2021. With the mandate just around the […]

EMEA VAT & Fiscal Reporting
September 15, 2021
EU E-Commerce VAT Package FAQs: Understanding Marketplace Liability

The EU E-Commerce VAT Package is here. The new schemes, One Stop Shop (OSS) and Import One Stop Shop (IOSS) bring significant changes to VAT treatment and reporting mechanisms for sales to private individuals in the EU. Our recent webinar, Back to Basics: The EU E-Commerce VAT Package, discussed the basic principles of the three […]

EMEA IPT
September 15, 2021
IPT Compliance in the UK: What Does the Metropolitan Fire Brigade Act Mean for Insurers in Greater London?

IPT compliance is complex, especially when insurers are writing across multiple regions, jurisdictions or boroughs.