The Internal Revenue Service (“IRS”) requires each United States “person” who has a financial interest in or signature authority over foreign bank accounts, the aggregate value of which exceeds $10,000, to annually file a Report of Foreign Bank and Financial Accounts (“FBAR”) providing certain information regarding such accounts.

This requirement is not new; however, recent indications from the IRS suggest that the reporting requirement may be much broader than once believed. Of particular relevance is the suggestion that tax-exempt employee benefit plan trusts may be subject to these rules if they hold equity interests in foreign investment funds. Questions have also arisen as to who is responsible for reporting such investments. Theoretically, the trust itself, as well as each of its trustees, could be responsible for filing FBARs related to the same accounts.

To date, there are many more questions than answers regarding how the FBAR requirements apply to employee benefit plans. In response to this and other confusion, the IRS has extended the 2008 filing deadline from June 30, 2009 to September 23, 2009 for certain entities that have only recently become aware of their obligation to file an FBAR. Additional guidance from the IRS on these questions should be forthcoming—an IRS comment period on the topic ends on August 31, 2009. In the meantime, plan sponsors can take affirmative steps now to prepare a possible FBAR filing by identifying the foreign investments in their plans.