There is a difficult choice presented to gambler’s who use off-shore companies for the activity. Whether they are sports betters, Internet poker players or Internet casino players they all have what may be considered interests in foreign financial accounts. If the government determines that these gamblers have an interest in a foreign financial account which has not been disclosed by timely and accurate filing of a Foreign Bank Account Report (FBAR) then a range of penalties can be applied ranging for civil monetary penalties to criminal charges.
Last year the U.S.government offered an amnesty for taxpayer’s who came forward and made a voluntary disclosure of their activities and agreed to a single year penalty. The condition was full disclosure of all acts, not just the tax acts, they committed. This meant that a taxpayer who was engaged in illegal gambling activity would have to come clean on the nature and extent of the activity as part of the voluntary disclosure. If they came clean and met the screening criteria, they would not be prosecuted for the tax crimes, but there was no guaranty of non-prosecution on other matters. So, many gamblers did not take advantage of the opportunity. There is a question that all gamblers who may be affect should consider.
Are they obligated to file an FBAR? Notice 2010-23 seems to imply that a person with an interest in a commingled account, like an unsecured interest in an on-line poker site or sports book, may not need to file an FBAR. Further clarification by the IRS is need on this point, but there is hope for those who avoided the voluntary disclosure and failed to filed timely and accurate FBAR’s . If you are interested in this issue, feel free to contact us to discuss your situation.
Tags: FBAR, Gamblers. gambling, Internet gambling, tax penalty, voluntary disclosure