The IRS has issued guidance in the form of Notice 2014-21 that virtual currencies such as Bitcoin will be treated as property. The sale or exchange of virtual currency or the use of virtual currency to pay for goods or services may result in a tax liability. Uncertainties continue, however, regarding the future regulation of these currencies and possible FBAR filing requirements. While the IRS has stated that there is no FBAR filing requirement for virtual currency holdings for the 2013 filing season, it seems likely that a future filing requirement will come to pass. Taxpayers using virtual currencies should be aware of this likelihood. Read more
During a recent webinar, an IRS official stated that for purposes of the current (2013) filing season, taxpayers aren’t required to report virtual currencies on a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury. However, while this previously disputed matter appears to be settled at present, the official stated that this position may well be subject to change. Read more here.