Last updated on June 6th, 2014 at 02:48 pm
During a recent Internal Revenue Service webinar, Rod Lundquist, a senior program analyst for the Small Business/Self-Employed Division, confirmed that taxpayers will not be required to report bitcoin on the FinCEN Form 114 (Report of Foreign Bank and Financial Accounts (FBAR)) for this year’s filing season, which is due Jun. 30.
“At this time, FinCEN has said Bitcoin is not reportable on the FBAR, at least for this filing season,” said Lundquist during a Jun. 4 webinar, according to a report first published by Bloomberg Bureau of National Affairs (BNA).
However, Lundquist noted that this exception might be modified at a later date as tax authorities continue to monitor the latest developments in the world of peer-to-peer decentralized virtual currencies. He said that it will review its policies regarding bitcoin and the FBAR guidance could be revised in the near future.
In the United States, taxpayers are mandated to report foreign financial accounts that have a value of a minimum of $10,000 to the Treasury Department’s Financial Crimes Enforcement Network – the IRS is responsible for audits and enforcement.
It’s no secret that tax officials have been assessing the cryptocurrency industry and have been quite transparent in confirming that law enforcement agencies are putting bitcoins and others like it under the microscope.
“It’s the wave of the future that’s here today and the IRS is looking at ways we can stop abuses,” Rebecca Sparkman, CI director of operations, policy and support. Together we’re going to have to look at how to deal with this new world,” said Rebecca Sparkman, CI director of operations, policy and support, who delivered remarks at the American Bar Association Section of Taxation meeting last month.
The IRS made headlines worldwide earlier this year when it issued a guidance regarding the reportage of bitcoin for federal tax purposes. Some of the measures include a miner’s income is subjected to self-employment taxation, miners must report mined coins at fair market value upon receipt and payments made using digital currency are subject to information reporting and backup withholding.
The IRS does not view bitcoin as a virtual currency but rather as a commodity. Any bitcoin buyer, seller, investor or miner who refuses to comply with the tax rules will face remunerative penalties.
“The implications this decision will have on the Bitcoin ecosystem are far reaching, and will be burdensome for both individual users of Bitcoins, Bitcoin-focused business and for the general adoption of virtual currencies,” said Charles Allen, chief executive officer of BitcoinShop, in an interview with Bloomberg News.
The price of bitcoin continues to surge ahead as it is trading at $660.