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
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
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
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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