FBAR Guidance and Proposed Rules Released by IRS

March 1, 2010

Public colleges and universities would be exempt from annual foreign bank account reporting (FBAR) on Form TD F 90-22.1, according to rules proposed by the Treasury Department. The proposal defines the types of accounts for which reports would be required, as well as those that would be exempt from filing. Consolidated reporting may be done when the filer has a financial interest in 25 or more foreign financial accounts. In those cases, only a listing and number of accounts need be provided on the annual report. Entities which own more than a 50 percent interest in one or more other entities required to do FBAR reporting may file a consolidated report.

No FBAR Filings Required for Pre-2009 and 2009 Hedge Funds and Private Equity Funds.

While the notice of proposed rulemaking (NPRM) does not address the future treatment of commingled funds, it states that mutual funds are generally required to file an FBAR. However, Notice 2010-23 clarifies that the IRS will not apply the term "commingled fund" to funds other than mutual funds for calendar year 2009 and prior years. In other words, the IRS will not apply enforcement adversely in the case of persons with a financial interest in, or signature authority over, any other foreign commingled fund with respect to that account for 2009 and earlier years. This expressly includes foreign hedge funds and private equity accounts. The notice further specifies that persons with signature authority, but no financial interest in, a financial account for which an FBAR would otherwise have been due on June 30, 2010, will now have until June 30, 2011, to report on those accounts.

IRS Announcement 2010-16 provides a continuation of the suspension of FBAR filing requirements for persons who are not U.S. citizens, U.S. residents, or domestic entities.

Share Comments with NACUBO.

The NPRM was published on Friday, February 26. Comments are due April 27. NACUBO will be submitting comments to the IRS. Please send comments from your institution to mary.bachinger@nacubo.org.