Pay Toll with Coins: Looking Back on FBAR Penalties and Prosecutions to Inform the Future of Cryptocurrency Taxation

Abstract

Cryptocurrencies are gaining a foothold in the globaleconomy, and the government wants its cut. However, fewpeople are reporting cryptocurrency transactions on their taxreturns. How will the IRS solve its cryptocurrencynoncompliance problem? Its response so far bears manysimilarities to the government’s campaign to increase Reportsof Foreign Bank and Financial Accounts (FBARs). FBARnoncompliance penalties are notoriously harsh, and thegovernment has pursued them vigorously. This Note exploresthe connections and differences between cryptocurrencyreporting and foreign bank account reporting in an effort topredict the future regime of cryptocurrency tax compliance.