On June 16, 2011, the Internal Revenue Service (the “IRS”) issued Notice 2011-54 (the “Notice”) to provide additional administrative relief for persons having only signatory authority over a foreign financial account, and who properly deferred filing a Report of Foreign Bank and Financial Accounts, Form TDF 90-22.1 (the “FBAR Form”) with respect to the 2009 and prior calendar years under previous IRS guidance. The FBAR Forms for such persons, which previously were to have been filed by June 30, 2011, may now be filed by November 1, 2011. However, the relief does not extend the filing requirement for FBAR Forms due for the 2010 calendar year, which continue to be due June 30, 2011.
Generally, any United States person having a beneficial interest in, or signatory authority over, a foreign financial account, must file an FBAR Form in respect of such account if the aggregate value in the account is more than $10,000 at any point during the calendar year. The FBAR Form in respect of each year generally must be filed by June 30 of the subsequent year.
On August 31, 2009, the IRS published Notice 2009-62, which, in part, extended until June 30, 2010, the filing deadline for persons with no financial interest in, but signature or other authority over, a foreign financial account for the 2008 or earlier calendar years. In 2010, the IRS further extended the filing deadline to file FBAR Forms for such persons for the 2009 and prior years until June 30, 2011. In Notice 2011-1, the Financial Crimes Enforcement Network of the Department of the Treasury (“FinCen”) further delayed (until June 30, 2012) the filing deadline for a limited class of such persons who are associated with public or regulated entities.
Final regulations regarding the filing of FBAR Forms became effective on March 28, 2011 (the “Final Regulations”). The Final Regulations are to be followed when filing FBAR Forms with respect to the 2010 calendar year, and may be used with respect to 2009 and earlier calendar years to the extent FBAR Forms for such years were properly deferred.
Under the Notice, persons with no financial interest in, but who have signatory authority over, a foreign financial account, and who have properly deferred filing FBAR Forms in respect of such accounts for the 2009 and prior calendar years under the prior IRS guidance, will have until November 1, 2011, to file forms in respect of such calendar years. Moreover, FBAR Forms of such persons in respect of the 2010 calendar year must still be filed by the regular due date of such forms, i.e., by June 30, 2011. The Notice does not affect the filing deadline for the smaller subset of persons who can avail themselves of FinCen’s prior guidance in its Notice 2011-1.
We expect that most of the FBAR Forms filed by our clients who sponsor or manage investment funds will relate to persons who have signatory authority over, but no financial interest in, foreign financial accounts. The persons who could have the signatory authority that would require filing an FBAR Form in a typical investment fund structure could include: the general partner or managing member of the fund (or person or entity serving in a similar capacity); the investment adviser to the fund; the officers and employees of the fund; and the principals, officers and employees of the fund’s general partner, managing member (or person or entity serving in a similar capacity) and investment adviser.
We expect that many of our clients made use of the IRS guidance to defer filing FBAR Forms in respect of such persons for the 2009 and prior calendar years. Accordingly, the relief provided by the Notice should offer significant additional time to prepare FBAR Forms for such persons in respect of such years.
This memorandum is provided by Bingham McCutchen LLP for information purposes only. It contains a summary of certain guidance provided by the IRS only and is not intended to be offered as legal advice.
This article was originally published by Bingham McCutchen LLP.