August 7, 2009
Today, the Internal Revenue Service ("IRS") announced that it was further extending the deadline for filing Reports of Foreign Bank and Financial Accounts ("FBARs") for calendar year 2008 and prior years for certain U.S. persons. IRS Notice 2009-62. The IRS is providing this relief for (i) persons with signature authority over, but no financial interest in, a foreign financial account, and (ii) persons with a financial interest in, or signature authority over, a foreign commingled fund.
The IRS issued Notice 2009-62 to provide the Department of the Treasury with more time to address issues pertaining to the FBAR filing requirements that were raised as a result of changes to the new FBAR form and instructions. The current instructions, with certain exceptions, require U.S. persons who have signature authority over, but no financial interest in, a foreign account, to file an FBAR, even it an FBAR is filed by the owner of the account (or another person that has a financial interest in the account). The new form instructions also have caused confusion about the FBAR filing requirements for interests in foreign hedge funds and private equity funds. This is based on the additional definition in the new instructions, which indicates that a "financial account" generally includes "any accounts in which the assets are held in a commingled fund, and the account holder holds an equity interest in the fund (including mutual funds)." The Notice requests public comments on these and other FBAR issues by October 6, 2009.
Given the confusion that has arisen concerning the FBAR requirements, this partial moratorium is a welcome development. It will provide the IRS with time to resolve some of the most contentious issues and to consider comments before the June 30, 2010 extended deadline.
Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have regarding these issues. If you have questions about the requirements, concerns about failure to file FBARs in the past, or potential tax issues coupled with a failure to file FBARs, please contact the Gibson Dunn attorney with whom you work or any of the following:
Tax Practice Group
Arthur D. Pasternak – Washington, D.C. (202-955-8582, firstname.lastname@example.org)
Jeffrey M. Trinklein - New York (212-351-2344, email@example.com)
Romina Weiss – New York (212-351-3929, firstname.lastname@example.org)
Benjamin H. Rippeon – Washington, D.C. (202-955-8265, email@example.com)
Investment Fund Practice Group
Edward D. Nelson – New York (212-351-2666, firstname.lastname@example.org)
Edward Sopher – New York (212-351-3918, email@example.com)
C. William Thomas, Jr. – Washington, D.C. (202-887-3735, firstname.lastname@example.org)
© 2009 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.