Casinos in the United States fall under the same currency requirements as banks and other financial institutions. Congress and the IRS recognized that money laundering and other currency shenanigans could occur at a casino. I’ve always felt that one day the Treasury Department would consider offshore (foreign) online casino to be a foreign financial institution and subject to reporting. Well, that day is here.
Every year I’ve sent an inquiry to the FBAR group at the Treasury on this subject. This year they responded that these accounts must be reported if the account value requirements were met.
To determine if you need to report your foreign financial accounts (including online casinos), determine the maximum value of each account during 2008. Add up the total. If the sum is $10,000 or more all your accounts must be reported.
You have to report these accounts in two ways. First, you must check a box on the bottom of Schedule B and list the country or countries where the accounts are. Second, you must file Form TD F 90-22.1 with the Department of the Treasury (not the IRS) by June 30th. No extension is available for this reporting requirement. Note that the form must be received by June 30th, not postmarked by that date.
The Treasury Department has revised Form TD F 90-22.1 for 2008. You used to have to just list the name of the financial institution, the account number, and indicate what range of money your account held (e.g. $10,000 – $99,999). This year you must list out the maximum value of each account and the address of the financial institution.
Indicating you have an account at a foreign financial institution doesn’t change your tax but it does increase your risk of audit. Given that the penalty for willfully not reporting a foreign financial account(s) is the greater of $100,000 or half the value in the account, you will need to report them.
Tags: FBAR
What happens if you only have, say, $2k in your account on June 30. Then decide to play in earnest, run hot, and roll that up over $10k in October?
The rules state: Determine the maximum value in each foreign account during the preceding year. Total (sum) those maximums. If the total is at least $10,000 you must report the account(s).
If you have $2,000 in February, $10,001 in October, and $2,000 in December, that account must be reported.
I think I misunderstood your post. If I had $2k in June, $10k in October, I have until June 30, 2009 to report the accounts to the Treasury. So, I don’t have to report them intrayear. Is that right?
Buh, I’m screwing this up. If I had $2k in June, $10k in October of 2008, then I don’t have to report them until 2009.
You’re correct. The report for any time during 2008 is due on June 30, 2009. You will also need to mark the box on Schedule B when you file your tax return.
[…] of Foreign Bank and Financial Accounts (FBAR) no longer applies to online poker accounts. The prevailing opinion was that the FBAR needed to be filled out if the combined amount of money in your online poker […]