• IRS Updates Certain FBAR Filing Requirements
  • March 19, 2010 | Author: Thomas W. Ostrander
  • Law Firm: Duane Morris LLP - Philadelphia Office
  • Continuation of Suspension of FBAR Filing Requirement for Persons Who Are Not U.S. Citizens, U.S. Residents or Domestic Entities

    In IRS Announcement 2010-16, the U.S. Internal Revenue Service announced that the requirement to file an FBAR due on June 30, 2010, is suspended for persons who are not United States citizens, United States residents or domestic entities. Additionally, all persons may rely on the definition of "United States person" found in the July 2000 version of the FBAR instructions to determine if they have an FBAR filing obligation for the 2009 and earlier calendar years. The definition of "United States person" from the July 2000 version of the FBAR states, "The term "United States person" means (1) a citizen or resident of the United States, (2) a domestic partnership, (3) a domestic corporation, or (4) a domestic estate or trust. This substitution of the definition of "United States person" applies only with respect to FBARs for the 2009 calendar year and, as originally provided in Announcement 2009-51, to earlier calendar years." Future year filings are likely to be governed by Bank Secrecy Act regulations (see discussion below) or further IRS guidance.

    FBAR Filing Requirements-Administrative Relief for Persons Having Signature Authority over, But No Financial Interest in, a Foreign Financial Account, and for Persons with a Financial Interest in, or Signature Authority over, Certain Foreign Commingled Funds

    In IRS Notice 2010-23, the IRS provides the following regarding FBAR filings:

    Signature Authority. Persons with signature authority over, but no financial interest in, a foreign financial account for which an FBAR would otherwise have been due on June 30, 2010, will now have until June 30, 2011, to report those foreign financial accounts. The deadline of June 30, 2011, applies to FBARs reporting foreign financial accounts over which the person has signature authority, but no financial interest, for the 2010 and prior calendar years. When completing an FBAR that is subject to the extension provided in this paragraph, persons must adhere to FBAR guidance in effect at the time the FBAR is filed.

    Certain Foreign Commingled Funds. Persons with a financial interest in, or signature authority over, a foreign commingled fund that is a mutual fund are required to file an FBAR unless another filing exception, as provided in the FBAR instructions or other relevant guidance, applies. The IRS will not interpret the term "commingled fund" as applying to funds other than mutual funds with respect to FBARs for calendar year 2009 and prior years. Thus, the IRS has determined that it will not apply its enforcement authority adversely in the case of persons with a financial interest in, or signature authority over, any other foreign commingled fund with respect to that account for calendar year 2009 and earlier calendar years. A financial interest in, or signature authority over, a foreign hedge fund or private equity fund is included in the administrative relief provided in the preceding sentence.

    FBAR-Related Questions on Federal Tax Forms. Provided the taxpayer has no other reportable foreign financial accounts for the year in question, a taxpayer who qualifies for the filing relief provided in Notice 2010-23 should check the "no" box in response to FBAR-related questions found on federal tax forms for 2009 and earlier years that ask about the existence of a financial interest in, or signature authority over, a foreign financial account.