Manafort Trial FBAR Conviction Alert !
In the U.S. v. Paul Manafort trial, the jury reached a partial verdict finding Paul Manafort guilty on five counts of tax fraud and one count of failing to file foreign bank account reports (“FBARs”).
The duty to file a Report of Foreign Bank Account (FBAR) is found in the Bank Secrecy Act. When taxpayers fail to report FBAR they are subject to a potential penalty of up to $10,000 per a violation. If the noncompliance was willful in nature, penalties escalate to the greater of $100,000 or 50 percent of the account balance. The duty to file FBAR exists any time the aggregate balance in foreign financial accounts exceeds $10,000.
If you deal in cryptocurrency you should understand the requirements for reporting such activities to the IRS. Failure to do so, may impose civil and criminal penalties.
Although in the past IRS has treated cryptocurrency as property, the different methods of owning cryptocurrency may impact the duty to report it. Taxpayers could align their handling of cryptocurrency to comport with that of gold, hard currency and real estate. That is, these assets are generally not reportable for foreign account purposes when held directly, but they become reportable when they are stored in a foreign financial account.
Since each different scenario may require a different handling approach, we suggest to analyze your particular situation to ascertain if you are required to report your cryptocurrency holdings, please contact your tax advisor for help.
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