Canada: Flash: Further Limited FBAR Extensions Granted

Last week, the IRS granted a further four-month extension of the deadline for pre-2010 FBARs in situations where a U.S. person had signature or other authority over a foreign financial account but did not have a beneficial interest in such account.1 A separate one-year extension of the deadline for such filings was also announced for certain employees of registered investment advisors.2


Foreign bank account reports (FBARs) are required to be filed by U.S. persons who either have a beneficial interest in a foreign financial account or have signature authority or other control over such an account. FBARs are generally due by June 30th of the year following the year for which the report is required to be filed and are not eligible for any extensions. In 2009, the IRS suggested that it was reconsidering the need for such filings in the case of a U.S. person that has signature or other authority but no beneficial interest in an account, and indicated that the due date for such filings for years 2008 and prior would be extended to June 30, 2010. In 2010, the IRS indicated that it was still studying this issue and extended the due date for such filings for 2009 and prior years to June 30, 2011.

While the IRS has been delegated the authority to administer and enforce the FBAR filing requirements, the agency that is authorized to promulgate regulations governing those requirements is the Financial Crimes Enforcement Network (FinCEN). Final regulations on the FBAR filing requirements were issued by FinCEN in February 2011. The new regulations confirm that U.S. persons who have only signature or other authority over a foreign account but no beneficial interest in the account are generally required to file FBARs. The final regulations do provide for several exceptions to the FBAR filing requirements. One exception (the "investment advisor" exception) applies to officers or employees of a registered investment advisor that provides investment advisory services to a registered investment company. This exception provides that no FBARs are required for an account of such a registered investment company if the officer or employee of the registered investment advisor has signature or other authority over the account but has no beneficial interest in the account.3

Recent Notices

The final regulations' requirement that a U.S. person with signature or other authority but no beneficial interest in an account file an FBAR affects, among others, many U.S. individuals who are officers or employees of companies and that have signature authority over accounts of their employers. Under the final regulations, individuals who were relying on the prior IRS extensions of filing deadlines to delay filing FBARs will now have to file not only for 2010, but also for any prior years for which they have not filed FBARs. In recognition of the difficulty many filers will have in obtaining all of the necessary information for these filings, the IRS's latest notice extends the deadline for such prior-year FBARs to November 1, 2011. However, the Notice does not extend the deadline for 2010 FBARs, which are still due on June 30, 2011.

Following the issuance of the final regulations, FinCEN received comments requesting that the investment advisor exception be expanded (e.g., to cover officers or employees of registered investment advisors who service investment entities, such as hedge funds or private equity funds, that are not registered investment companies); FinCEN also received complaints about the difficulties such individuals were having in meeting the June 30, 2011 deadline. Consequently, last week FinCEN granted a new one-year extension, to June 30, 2012, to allow officers and employees of registered investment advisors who advise such unregistered entities more time to file their FBARs. This extension is available for calendar year 2010 FBARs as well as FBARs for 2009 and earlier years for which the filing deadline was previously deferred under the IRS notices mentioned above. The one-year extension may be a signal that FinCEN is considering exempting such accounts from filing FBARs, but the notice is silent regarding any possibility of a permanent exemption.


1.IRS Notice 2011-54.

2.FinCEN Notice 2011-2.

3.Other exceptions are available for officers and employees of banks and other financial institutions and for officers and employees of public companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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