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Image source: https://www.flickr.com/photos/76592024@N06/

Image source: https://www.flickr.com/photos/76592024@N06/

The Internal Revenue Service is rarely seen as a source of good news when it comes to paperwork. On Wednesday, however, the IRS announced during a webinar for tax professionals that bitcoin holdings did not need to be reported to the Financial Crimes Enforcement Network (FinCEN) for this year’s tax season. There had been some concern in the accounting world that cryptocurrencies might fall under the Report of Foreign Bank and Financial Account (FBAR), better known as Form 114, due to the still unclear legal status of digital money.

Bloomberg Bureau of National Affairs (BNA) reports that the policy is not set in stone, and only applies to the current tax year. The deadline for the mandatory FBAR filing is June 30. The report quoted IRS senior program analyst Rod Lundquist, who cautioned that the IRS’s stance on digital currency could shift next year as Congress and other authorities clarify exactly what legal status bitcoin will ultimately have.

In answer to a question during the webinar, Lundquist said, “At this time, FinCEN has said Bitcoin is not reportable on the FBAR, at least for this filing season.” As the IRS continues to scrutinize the currency and how it is being used, taxpayers should be alert that the FBAR policy could shift, Lundquist said.

Under the current rules, taxpayers must report foreign financial accounts if the combined value is $10,000 or more. IRS policy views bitcoin and other virtual currencies as property, like stocks or gold, as the value is not derived from a foreign government or central bank. At least a few members of Congress have introduced the idea of overruling the IRS decision with a law that would recategorize virtual currency.

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