I thought we had reached the end of our FBAR streak, but not yet. In a Federal District Court case opinion released last week, the Northern District of California ruled that a U.S. online gambler was obligated to report his internet accounts with offshore poker sites PokerStars.com and PartyPoker.com on an FBAR form. Since the taxpayer could make deposits to, and withdraw from, his poker accounts, the court found that the accounts came within the definition of “a bank, securities, or other financial account.”
I don’t know how many U.S. persons have accounts with online gambling sites that are situated outside the U.S., but I am sure that the taxpayer here has plenty of company. If the aggregate balance in all of a taxpayer’s non-U.S. accounts exceeds $10,000 at any time during the year, an FBAR is due. As we all know by now, the penalties for not filing an FBAR can be severe.
If one accepts the reasoning and finding of this case, then tax preparers should be adding to their questionnaires whether the taxpayer has any internet account based on an offshore site that funds gambling activities (or any other activity for that manner) for which the taxpayer can make deposits and withdrawals.
U.S. v. HOM, 113 AFTR 2d 2014-XXXX, (DC CA), 06/04/2014