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New FBAR Form and Instructions Fail to Clarify Applicability of Offshore Online Casino Accounts

March 31st, 2011 No comments

Not that I expected them to.

In late February, FinCEN (Financial Crimes Enforcement Network) issued final regulations governing the Foreign Bank Account Reporting (FBAR) laws, effective March 28, 2011.  These regulations do apply to the 2010 tax year.  In order to incorporate the new regs, the Department of Treasury recently released the revised Form TD F 90-22.1, more commonly known as the FBAR.

On the FBAR form itself, Treasury states:

The estimated average burden with this collection of information is 20 minutes per respondent or record keeper, depending on individual circumstances.

Sure, maybe if you only consider the “easy” part of this process–actually filling out the form.  The harder part is what must be done beforehand–determining whether one is even required to report an account.

I’ve written about the FBAR several times, but it can’t hurt to see the bottom line rule again:

If the total maximum balances of all foreign bank accounts of a U.S. person during the tax year exceed $10,000, then that person must file the FBAR by June 30 of the following tax year.

This rule hasn’t changed.  What has changed, among other things, is the scope of reportable accounts.  Fairly recently, I discussed in detail how a change in one provision seemed to exclude accounts with offshore online casinos.  A commenter then pointed out another provision that he suggested could include such accounts.  After careful thought (he raised a fair question), I didn’t change my position.  But I was sure to note just that:  It’s only my position.

The Treasury hasn’t commented on this issue as far as I know; it’s anybody’s guess whether one day they decide to.  I was hoping the instructions would provide more guidance; that was wishful thinking.

So we move on in a state of uncertainty.  Consider these two points:

  1. It is possible Treasury could at some point view offshore online casino accounts as subject to FBAR disclosure, and
  2. It is becoming more and more likely the IRS will have access to the records of offshore online casinos if and when offshore online casinos bring their operations to U.S. soil.

Ultimately, I don’t see the downside to playing it safe and filing the FBAR (other than the supposed 20 minutes it takes to complete).

If you believe you should have filed the FBAR in past years and did not, consider participating in the FBAR Voluntary Disclosure Program.  Be sure consult a tax professional to discuss all of your options, of course.

Categories: Gambling, Gambling Tax Basics, IRS Tags: ,
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