Client Alert: Due June 30, 2010 - Report of Foreign Bank and Financial Accounts, Form 90-22.1

06.17.10

Report of Foreign Bank and Financial Accounts, Form 90-22.1

If you owned or had signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund or other commingled fund, unit trust or other type of financial account during 2009 you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR). A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. The 2009 FBAR must be received by the IRS on or before June 30, 2010 unless you have signature authority only, in which case you have a special extension until June 30, 2011 (see "Filing Information" below).

Under the Bank Secrecy Act, a "United States person" must file an FBAR (Form 90-22.1) if:

The person had a financial interest in, or signature authority (or other authority that is comparable to signature authority) over one or more accounts in a foreign country and
The aggregate value of all foreign financial accounts exceeded $10,000 at any time during 2009.

"United States person" Defined

A "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.

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, for 2009 and earlier calendar years (Announcement 2010-16).

Commingled Funds

For 2009 and prior years, 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 exception is applicable. Commingled funds such as hedge funds and private equity funds do not need to be reported unless the filer has more than a 50% ownership interest. The IRS has not addressed future filing requirements for commingled funds.

Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements may be found in the instructions of Form 90-22.1. These exceptions include:

Accounts in U.S. military banking facilities operated by a United States financial institution to serve U.S. Government installations abroad are not considered to be accounts in a foreign country for purposes of the reporting requirements.
An officer or employee of a bank that is subject to the supervisions of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision, or the Federal Deposit Insurance Corporation, is not required to report having signature authority over a foreign account if the officer or employee has no personal interest in the account.
An officer or employee of a domestic corporation with equity securities that are listed on a national securities exchange or which has assets exceeding $10 million AND 500 or more shareholders of record, is not required to report having signature or other authority over a foreign account if the person has no personal financial interest in the account, and the officer or employee has been advised in writing by the CFO of the corporation that the corporation has filed a current report that included the foreign account.

Filing Information

The FBAR must be received (not postmarked) by the IRS on or before June 30, 2010. You may not request an extension for filing the FBAR. The granting by the IRS of an extension to file Federal income tax returns does not extend the due date for the filing of an FBAR.

Extension of Filing Deadline for Signature Authority Only (Notice 2010-23) - Persons with signature authority over, but no financial interest in a foreign financial account for which an FBAR would otherwise been due on June 30, 2010 have been granted an extension until June 30, 2011 to report those foreign financial accounts. No other extensions have been granted.

Filing of the Report of Foreign Bank and Financial accounts may be done by mailing the Form 90-22.1 to:
     U.S. Department of the Treasury
     P.O. Box 32621
     Detroit, MI 48232-0621

If an express delivery service is used, file by mailing to:
     IRS Enterprise Computing Center
     ATTN: CTR Operations Mailroom, 4th Floor
     985 Michigan Avenue
     Detroit, MI 48226

Delivery Messenger service contact telephone number: (313) 234-1062

Account holders who do not comply with the FBAR reporting requirements may be subject to civil penalties, criminal penalties, or both.

For additional information please see the following website:
http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

Responsibility to Assess Filing Requirements

The FBAR reporting requirements are complex. In addition to the IRS rules above, on February 26, 2010, the Treasury Department issued a Notice of Proposed Rulemaking and draft instructions to the FBAR. As of the date of this email the proposed regulations have not been adopted and therefore are not in effect.

Each United States person must address their FBAR filing obligation based on the facts of their situation and the IRS guidelines available. This email is designed to identify general reporting requirements and filing deadlines only. This email is not designed to provide detailed advice on your specific situation. Please contact the Argy International Service team members listed below if you have any questions.

Patty Brickett
Direct: 703.752.2782
Email: pbrickett@argy.com

Danielle Petroff-Gobeille
Direct: 703.752.7399
Email: dpgobeille@argy.com

For more information, please visit the following links:

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