Introduction

On August 7, 2009, the Internal Revenue Service (the "IRS") extended the deadline for certain US persons to file form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"). Notice 2009-62 provides that (i) persons with signature or other authority over, but no financial interest in, a foreign financial account and (ii) persons with a financial interest in, or signature or other authority over, a foreign commingled fund have until June 30, 2010 to file the FBAR for calendar year 2008 as well as all earlier years. For information concerning prior changes to the FBAR filing requirement, see our June 18 and June 25 Client Alerts.

Background

Under requirements imposed by the Bank Secrecy Act and the corresponding regulations, the United States Department of the Treasury (the "Treasury") requires a US 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 instructions provide that "financial accounts" generally encompass any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds). As discussed in greater detail in our June 18 Client Alert, the IRS took the position in an oral communication that offshore hedge funds and other offshore private investment funds, as commingled funds, are "financial accounts" for FBAR purposes.

The FBAR is generally 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 IRS previously announced that certain taxpayers may file the FBAR for 2008 and earlier calendar years by September 23, 2009 without penalty, provided that such taxpayers comply with additional filing requirements.

Extension of FBAR Filing Deadline

On August 7, the IRS announced that it again extended the deadline for certain US Persons to file the FBAR without penalty. Notice 2009-62 extends the FBAR filing deadline for (i) persons with signature or other authority over, but no financial interest in, a foreign financial account and (ii) persons with a financial interest in, or signature or other authority over, a foreign commingled fund. Such persons have until June 30, 2010 to file the FBAR for 2008 and earlier calendar years with respect to these foreign financial accounts. The Notice indicates that further guidance regarding the FBAR filing requirement will be issued prior to June 30, 2010.

The extension applies to, among others, US Persons with a financial interest in an offshore private equity or hedge fund. For instance, the following persons now have until June 30, 2010 to file the FBAR for 2008 as well as earlier calendar years: (i) US Sponsors, with respect to their carried interest in a stand-alone offshore hedge fund, offshore feeder fund, or offshore master fund; (ii) US feeder funds, such as Delaware limited liability companies, with respect to their interest in an offshore private equity or hedge fund; and (iii) US investors in such funds, including US tax exempt entities, with respect to their interest in the offshore funds. The extension also applies to individual employees with signature authority over, but no financial interest in, foreign financial accounts.

Conclusion

The IRS has extended the FBAR filing deadline until June 30, 2010 for (i) persons with signature or other authority over, but no financial interest in, a foreign financial account and (ii) persons with a financial interest in, or signature or other authority over, a foreign commingled fund. The extension applies to, among others, US Sponsors with an interest in an offshore private equity or hedge fund. Further guidance regarding the FBAR filing requirement is expected before June 30, 2010.