The Treasury Department has provided some welcome relief concerning Foreign Bank Account Report (FBAR) filing requirements, although many key issues remain unresolved.

Last week the IRS published Notice 2010-23, which provides that persons with financial interests in foreign hedge funds or foreign private equity funds will not be required to file FBARs for such interests for calendar year 2009 and earlier years. It remains unclear whether such interests will be deemed reportable financial accounts for 2010 and thereafter.

Notice 2010-23 also extends the filing deadline for persons with signature authority over, but no financial interest in, foreign financial accounts. According to the Notice, FBARs for 2009 (which would otherwise be due on June 30, 2010) and earlier years will now be due on June 30, 2011.

Treasury has also proposed regulations that make clear that reportable financial accounts include mutual funds and similar pooled funds. The Proposed Regulations reserve on whether interests in offshore investment funds, such as hedge funds and private equity funds, constitute reportable financial accounts. The preamble to the Proposed Regulations states that Treasury will continue to study this issue.

The Proposed Regulations also would create FBAR filing exemptions for (i) participants in qualified plans and owners of individual retirement accounts (only the trustee would be obligated to file the FBAR) and (ii) investment advisors providing advice to entities registered with the SEC.

We will continue to monitor developments concerning the FBAR reporting rules. Please contact any of the Lowenstein Sandler attorneys listed for further information.

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