Introduction

Last week, we issued a Client Alert concerning recent guidance from the Internal Revenue Service (the "Service") about Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"). The deadline for filing the FBAR for the 2008 calendar year is June 30, 2009. Yesterday, the Service released "Additional Frequently Asked Questions" concerning the FBAR filing requirement for the 2008 calendar year. The Service clarified that certain taxpayers who reported and paid tax on all of their 2008 taxable income but who only recently learned of their FBAR filing obligation may file a delinquent FBAR by September 23, 2009 without being subject to penalty. However, such taxpayers are required to submit additional information with the delinquent FBAR, including a copy of their 2008 tax return.

Background

Under requirements imposed by the Bank Secrecy Act and the corresponding regulations, the United States Department of the Treasury (the "Treasury") requires a United States person to file the FBAR if that person has a financial interest in, or signature or other authority over, foreign financial accounts in which the aggregate value of these financial accounts exceeds US$10,000 at any time during the calendar year. The FBAR is required to be filed with the Treasury on or before June 30 of each year with respect to interests held in accounts during the prior year. The deadline for filing the FBAR for the 2008 calendar year is June 30, 2009.

Changes to the FBAR Filing Deadline

On June 24, the Service announced that certain taxpayers may file the FBAR for the 2008 calendar year by September 23, 2009 without penalty. In order to be eligible for this extended filing deadline, taxpayers are required to have paid tax on all of their 2008 taxable income and they must have only recently learned of their FBAR filing obligation and have insufficient time to gather the necessary information to complete the FBAR form. Such taxpayers should file the delinquent FBAR according to the instructions and attach a statement explaining why the report is filed late. Taxpayers are also required to attach a physical copy of their 2008 tax return to the delinquent FBAR. There is an exception to the requirement that a copy of the 2008 tax return must be attached to the delinquent FBAR for 2008 tax returns due after September 23, 2009. However, this exception should only affect a limited universe of taxpayers who are eligible for an extension of the due date for their 2008 tax return beyond September 23, 2009 and have in fact filed for such an extension.

Unless taxpayers are willing to file the explanatory statement and a physical copy of their 2008 tax return with the delinquent FBAR, we advise that taxpayers file the FBAR for the 2008 calendar year by the original June 30, 2009 deadline.

Conclusion

Taxpayers who reported and paid tax on all of their 2008 taxable income but who only recently learned of their FBAR filing obligation and have insufficient time to gather the necessary information to complete the FBAR have until September 23, 2009 to file the FBAR without the risk of penalties imposed by the Service. However, to qualify for this extension, such taxpayers are required to attach a statement explaining why the report is filed late and a copy of their 2008 tax return to the delinquent FBAR. If taxpayers want to avoid this additional disclosure, we recommend that they file the FBAR by June 30, 2009.