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Old 06-09-2014, 06:57 PM   #226
LetsGambool
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Re: Reporting Poker Sites as Foreign Accounts Catch All

One other thing, court is apparently looking for someone to argue Mr Hom's case for him since he tried to represent himself (not the best idea!)


Quote:
Hom Represented Himself.

Hom, who apparently had resources for representation, chose to represent himself in the case. As noted in the quote above, the court apparently recognized that the issues were novel and important and perhaps not properly briefed from Hom's side. The court issued a general invitation for some attorney to brief the issues on a pro bono basis. No pro bone attorney came forward came forward, so the Court decided the case on the briefing it had from the U.S. and from Hom personally. The following is the Court's order seeking pro bono counsel.

Defendant John Hom is not indigent and therefore does not qualify for appointment of
pro bono counsel with the Court’s federal pro bono project. This tax action, however, involves
novel questions of law regarding the interpretation of the Bank Secrecy Act and related
regulations. Accordingly, the Court seeks counsel to volunteer to represent defendant on a pro
bono basis for the remainder of this action. Pro bono counsel will be allowed to re-brief the
pending summary judgment motion, which is currently held under submission. In addition, a
case management schedule has not yet been set.
If any counsel is willing to volunteer to represent defendant, please email the undersigned
judge’s courtroom deputy, Dawn Toland, at whacrd@cand.uscourts.gov by JUNE 12, 2014.
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Old 06-13-2014, 07:44 PM   #227
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Re: Reporting Poker Sites as Foreign Accounts Catch All

I can't decide whether the timing of this ruling is convenient or inconvenient, based on the fact that you have until June 30 to file your FBAR for the previous tax year.
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Old 06-17-2014, 03:52 PM   #228
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Quote:
Originally Posted by LetsGambool View Post
Does the judgment take into account the 2011 update from FINCEN given that the litigation was over 2006/2007 account reporting?

Sort of glad I ended up out of playing for material money online given this ruling.
This seems important. Shouldn't this court ruling only impact people who did not report them prior to 2011?
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Old 06-18-2014, 09:47 AM   #229
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by Two SHAE View Post
This seems important. Shouldn't this court ruling only impact people who did not report them prior to 2011?
No. The judge noted the new regulations but felt that poker sites are still "banks" under the new rules.

-- Russ Fox
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Old 06-19-2014, 01:22 PM   #230
LetsGambool
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Thanks Russ. Thanks again for continuing to follow this and for posting information about the case and information about the sites necessary to file the FBAR.
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Old 06-21-2014, 05:11 AM   #231
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Re: Reporting Poker Sites as Foreign Accounts Catch All

This is disturbing. What is one supposed to do if they aren't on 2+2 and don't see this last minute change? Surely many people are going to be clueless about this. The IRS can't give a direct answer or comment on this in light of new developments?

My understanding is that you cannot file an extension but you can make amendments. If a person finds this out in three months, should they just go back and amend an FBAR that wasn't filed in the first place?

Also a few questions about the case:

Isn't the statute of limitations passed for his 2006 and 2007 returns?

It also mentions that he did file an FBAR in 2010 and it sounds like the implication is he not only filed it for 2010 but amended to file for all previous years such that the firepay account in 2006 was the only thing in question and not on the books correctly. Why is he in trouble for all the other accounts that were amended in 2010? Is going back and fixing an error not good enough? They will still crush him for it eight years later even if he amended it in 2010 and updated in a way he thought was correct?

How did this case even come to pass? Just an audit that led to an investigation into this? Is there any other case history similar to this?

Last edited by DanPan; 06-21-2014 at 05:24 AM.
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Old 06-22-2014, 01:29 PM   #232
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Re: Reporting Poker Sites as Foreign Accounts Catch All

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Originally Posted by Russ Fox View Post
In any case, I will update on this as I have more news.

-- Russ Fox
Have they responded to your request for clarification yet regarding poker sites?
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Old 06-24-2014, 04:38 AM   #233
DanPan
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Re: Reporting Poker Sites as Foreign Accounts Catch All

What is the 'account number' of a poker site? Can you just leave that blank or put your first and last name?

Does fincen take phone calls asking for help or anything of that nature? And does it matter if nothing they say is binding or can it be helpful?
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Old 06-24-2014, 11:14 AM   #234
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Re: Reporting Poker Sites as Foreign Accounts Catch All

I have not gotten a response.

We don't know the back-story of the Hom case other than there is one. It is unusual for an FBAR prosecution over small balances, but Mr. Hom may have angered an IRS auditor, or might have done something else that would have caused the issue. Once a prosecution begins, the statute of limitations "tolls" (extends). Let's say that the DOJ prosecutes you today for your 2011 tax returns (assuming timely filing, these go "out of audit" on April 15, 2015). Once the prosecution begins, it's legal.

It's a little different with audits (a "civil" issue). Let's say you're being audited for 2011, and it's April 10, 2015. If the IRS doesn't complete the audit or issue a Statutory Notice of Deficiency by April 15, 2015, you win. The IRS is very aware of this and will almost always issue Notices of Deficiency timely.

The account number for a poker site is the screen name.

You can email the FBAR group at FBARquestions@irs.gov Of course, the IRS isn't bound by their own advice (lol) so it's not that helpful.


-- Russ Fox
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Old 06-24-2014, 11:38 AM   #235
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Re: Reporting Poker Sites as Foreign Accounts Catch All

I used the email address associated with my accounts if it's possible to log in using my email address.
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Old 06-24-2014, 07:19 PM   #236
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Quote:
Originally Posted by Russ Fox View Post
I have not gotten a response.

We don't know the back-story of the Hom case other than there is one. It is unusual for an FBAR prosecution over small balances, but Mr. Hom may have angered an IRS auditor, or might have done something else that would have caused the issue. Once a prosecution begins, the statute of limitations "tolls" (extends). Let's say that the DOJ prosecutes you today for your 2011 tax returns (assuming timely filing, these go "out of audit" on April 15, 2015). Once the prosecution begins, it's legal.

It's a little different with audits (a "civil" issue). Let's say you're being audited for 2011, and it's April 10, 2015. If the IRS doesn't complete the audit or issue a Statutory Notice of Deficiency by April 15, 2015, you win. The IRS is very aware of this and will almost always issue Notices of Deficiency timely.

The account number for a poker site is the screen name.

You can email the FBAR group at FBARquestions@irs.gov Of course, the IRS isn't bound by their own advice (lol) so it's not that helpful.


-- Russ Fox
Quote:
Originally Posted by dark_horse View Post
I used the email address associated with my accounts if it's possible to log in using my email address.
On a past FBAR, I just put my name in the account number field for the poker site. Surely this can't be some big issue, right? It's not like there are clear rules on how to report a poker site and all that should matter is that you are reporting it in the first place. Is there any reason to amend my past FBARs for such a minute detail? If somehow the government needed to contact the poker site for info, a name would do the trick, so not sure why it matters whether you give your SN, email, address or just the site and your full name as it all leads to the same source.
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Old 03-19-2017, 09:53 PM   #237
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Declaring a foreign bank account/poker site

In a different forum thread a player posted the following:

"ill never understand why sites cant keep players funds completely segregated...it makes no sense to ever be short with juice they collect"

If you're a pro and don't know whether your site segregates player accounts and/or whether the money is actually in a bank, how exactly would you declare a foreign bank account?

Last edited by Poker Clif; 03-19-2017 at 09:55 PM. Reason: Edited for clarity. No significant content change.
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Old 03-20-2017, 06:59 AM   #238
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Re: Declaring a foreign bank account/poker site

Quote:
Originally Posted by Poker Clif View Post
In a different forum thread a player posted the following:

"ill never understand why sites cant keep players funds completely segregated...it makes no sense to ever be short with juice they collect"

If you're a pro and don't know whether your site segregates player accounts and/or whether the money is actually in a bank, how exactly would you declare a foreign bank account?
Your poker account would be considered your foreign bank account. It doesn't matter what the site does with the money itself.

Similarly, your checking or savings account at Wells Fargo, Bank of America, Chase or wherever is considered your US bank account, even though the money itself is probably lent out to someone else and not kept segregated.
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Old 04-21-2017, 04:45 PM   #239
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Re: Reporting Poker Sites as Foreign Accounts Catch All

It seems that poker accounts are not the foreign bank accounts after all.

https://taxcontroversywatch.com/2016...table-on-fbar/

9th Circuit: Online Poker Accounts Not Reportable on FBAR
Posted on July 28, 2016 by Jeffrey M. Rosenfeld

On July 21, 2016, the Ninth Circuit in United States v. Hom, No. 14-16214 D.C. No. 3:13-cv-03721-WHA (9th Cir. 2016), determined that a taxpayer who held an online poker account with PokerStars and PartyPoker was not required to report those accounts on a FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR). The taxpayer, however, was required to report his FirePay account on an FBAR.

The Ninth Circuit overturned the decision of the United States District Court for the Northern District of California, in part, which had held that all these three accounts were reportable on an FBAR.

The key issue was whether either PokerStars, PartyPoker or FirePay was a financial institution.

The Ninth Circuit stated that:

“[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/irsf...renceguide.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.
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Old 05-11-2017, 01:03 PM   #240
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Re: Reporting Poker Sites as Foreign Accounts Catch All

Quote:
Originally Posted by Timely error View Post
It seems that poker accounts are not the foreign bank accounts after all.

https://taxcontroversywatch.com/2016...table-on-fbar/

9th Circuit: Online Poker Accounts Not Reportable on FBAR
Posted on July 28, 2016 by Jeffrey M. Rosenfeld

On July 21, 2016, the Ninth Circuit in United States v. Hom, No. 14-16214 D.C. No. 3:13-cv-03721-WHA (9th Cir. 2016), determined that a taxpayer who held an online poker account with PokerStars and PartyPoker was not required to report those accounts on a FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR). The taxpayer, however, was required to report his FirePay account on an FBAR.

The Ninth Circuit overturned the decision of the United States District Court for the Northern District of California, in part, which had held that all these three accounts were reportable on an FBAR.

The key issue was whether either PokerStars, PartyPoker or FirePay was a financial institution.

The Ninth Circuit stated that:

“[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/irsf...renceguide.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.
This ruling by the circuit was an unpublished opinion, which means it has no precendential value. The court did not allow the IRS to argue that the entities in question were casinos, since it was already late in the proceedings. If it had allowed this argument, Hom would have lost and would have had to show his PokerStars and PartyPoker accounts on an FBAR. Moving forward it would probably be wise to err on the side of caution here...
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