The US Court of Appeals for the Ninth Circuit recently overturned a lower court ruling regarding FBAR (Foreign Bank and Financial Accounts Report -- Treasury Form TD F 90-22.1).
Essentially, "pure offshore poker accounts" are not reportable under FBAR, but offshore "money transmission" accounts are reportable.
From the judgement :
The issue before us is whether Hom’s accounts with FirePay, PokerStars,
and PartyPoker required the filing of FBAR forms under 31 U.S.C § 5314, which
provides that the Secretary of the Treasury “shall require” U.S. persons to “keep
records and file reports . . . [when those persons] make a transaction or maintain
a relation for any person with a foreign financial agency.” Under the regulation in
effect at the time, the key questions are whether Hom’s accounts were “bank,
securities, or other financial account[s]” and whether those accounts were “in a
foreign country.” See 31 C.F.R. § 103.24 (2006). If both questions are answered
in the affirmative, the accounts required the filing of FBAR forms.
“[F]inancial agency” is defined in 31 U.S.C § 5312(a)(1) as “a person acting
for a person . . . as a financial institution.” “[F]inancial institution” is in turn
defined to include a number of specific types of businesses, including “a
commercial bank,” “a private banker,” and “a licensed sender of money or any
other person who engages as a business in the transmission of funds.” 31 U.S.C. § 5312(a)(2).
Hom’s FirePay account fits within the definition of a financial institution for
purposes of FBAR filing requirements because FirePay is a money transmitter.
See 31 U.S.C. § 5312(a)(2)(R); 31 C.F.R. § 103.11(uu)(5) (2006). FirePay acted
as an intermediary between Hom’s Wells Fargo account and the online poker sites.
Hom could carry a balance in his FirePay account, and he could transfer his
FirePay funds to either his Wells Fargo account or his online poker accounts. It
also appears that FirePay charged fees to transfer funds. As such, FirePay acted as
“a licensed sender of money or any other person who engages as a business in the
transmission of funds” under 31 U.S.C. § 5312(a)(2)(R) and therefore qualifies as a
“financial institution.” See 31 C.F.R. § 103.11(uu)(5) (2006). Hom’s FirePay
account is also “in a foreign country” because FirePay is located in and regulated
by the United Kingdom. See IRS, FBAR Reference Guide,
https://www.irs.gov/pub/irs-utl/irsfbarreferenceguide.pdf (last visited July 19,
2016) (“Typically, a financial account that is maintained with a financial institution
located outside of the United States is a foreign financial account.”).
In contrast, Hom’s PokerStars and PartyPoker accounts do not fall within the
definition of a “bank, securities, or other financial account.” PartyPoker and
PokerStars primarily facilitate online gambling. Hom could carry a balance on his
PokerStars account, and indeed he needed a certain balance in order to “sit” down
to a poker game. But the funds were used to play poker and there is no evidence
that PokerStars served any other financial purpose for Hom. Hom’s PartyPoker
account functioned in essentially same manner.
The Government argues that these entities were functioning as banks, but
this argument lacks support. Neither the statute nor the regulations define
banking. In discerning the plain meaning of the text, we interpret words in light
of their “ordinary, contemporary, common meaning” unless they are otherwise