Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

News Releases

8/20/2009 Some FBAR Filers Have Until June 2010 to File, and Some May Never Have to File

On June 5, 2009, the IRS announced a temporary suspension of the FBAR filing requirement for persons who are not U.S. citizens, residents, or domestic entities.  On May 6 and June 24, 2009, the IRS posted questions and answers on its website providing relief to those only recently learning of their FBAR filing obligations, with a filing deadline of September 23, 2009.  Now, in Notice 2009-62, the filing deadline is again being extended for:
 
1. Persons with no financial interest in a foreign financial account but with signature or other authority over that account.
2. Persons with a financial interest in, or signature authority over, a foreign financial account in which the assets are held in a commingled fund. 
 
Current instructions require that the FBAR for any calendar year must be filed by June 30 of the succeeding year, so except where certain relief applied, FBARs for 2008 should have been filed by June 30, 2009.  Now, however, the Notice provides that the two types of U.S. persons listed above have until June 30, 2010, to file an FBAR for 2008 and earlier calendar years with respect to those financial accounts.  FBARs for 2009 will be due the same day. But in a request for comments, Treasury indicates that some filers may be relieved of this responsibility altogether. 
 
Current instructions to TDF 90-22.1 require, with certain exceptions, that U.S. persons with signature authority over, but no financial interest in, a foreign financial account must file an FBAR.  These persons must file an FBAR even if the owner of the account, or someone else with an interest in it, is filing an FBAR.  The instructions also provide that any foreign bank, securities, securities derivatives, or other financial instruments account must be reported on an FBAR.  Reportable accounts, according to the form instructions “generally also encompass any accounts in which the assets are held in a commingled fund and the account owner holds an equity interest in the fund (including mutual funds).”   In the Notice, Treasury requests comments as to when a person with signature authority over, but no financial interest in, a foreign financial account, should be relieved of the FBAR filing requirement.  Should, Treasury asks, such a person be relieved of the filing responsibility when someone with a financial interest in the account has filed an FBAR? 
 
There is currently a filing exception for officers and employees of banks and certain publicly-traded domestic companies.  Should this exception be expanded to include all officers and employees with only signature authority over, and no financial interest in, an employer’s foreign financial account?  The Notice indicates that such a signature-authority officer or employee might be able to rely on a representation from someone else that an FBAR has been filed for the account. Should this exception for officers and employees of, say, a bank, apply to signature authority that the bank has over a client’s account?  Comments are also requested as to when an interest in a foreign entity—corporation, partnership, trust, estate—should be subject to FBAR reporting.  Treasury asks whether the reporting system of IRC Section 1297 and 1298(b) on passive foreign investment companies (PFICs) could be adapted to determine when an interest in a foreign entity should be subject to FBAR reporting.  Should the passive asset and passive income thresholds, respectively 50% and 75%, be used, and should both be applied for the FBAR situation?  Without any specificity, Treasury also asks if FBAR filing requirements regarding commingled funds should not apply in other circumstances.  Industry representatives should have something to say about this. 
 
Reducing the number of required filings will presumably allow Treasury to focus enforcement efforts on those persons it really thinks should be filing.  This issue will be discussed in a forthcoming issue of the Monitor. 

 

USA PATRIOT ACT MONITOR is published by Civic Research Institute, Inc., 4478 U.S. Route 27, P.O. Box 585, Kingston, NJ 08528, 609-683-4450, info@civicresearchinstitute.com, as an update service for Money Laundering, Terrorism and Financial Institutions: Law · Regulation · Compliance · USA PATRIOT Act Monitor © 2004 Civic Research Institute, Inc. All rights reserved. Unauthorized copying expressly prohibited. The information in this publication is not intended to replace the services of a trained legal professional. Neither the editors, nor the contributors, nor Civic Research Institute, Inc. are by this publication engaged in rendering legal, accounting, or other professional services. The editors, contributors, and Civic Research Institute, Inc., specifically disclaim any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use or application of the contents of this publication.

<< News Releases Main Page