Investors in Offshore Funds May File Late FBARs by September 23, 2009

Download IconDownload Print IconPrint

Investors in Offshore Funds May File Late FBARs by September 23, 2009

Publication

Authors

Related Solutions

Private equity and hedge fund sponsors turn to WilmerHale for advice on complex issues relating to the design and operation of tax-efficient structures for their funds and their funds’ investments. We advise investment fund sponsors concerning optimal offshore and onshore structures for their funds and investments, including the tax consequences for US and non-US investors of holding and disposing of their investment in such funds, tax treatment of the funds under US and non-US tax regimes, and tax considerations relevant to investments to be made by such funds. We also assist funds in connection with equity investments in technology and healthcare companies.
WilmerHale’s Investment Management Group provides sophisticated legal and regulatory advice to investment advisers, private fund sponsors, registered funds, and their independent trustees.
A deep and diverse practice focused on maximizing tax efficiencies and minimizing tax risks for clients nationally and internationally.
A statement reported in today's Wall Street Journal by an Internal Revenue Service ("IRS") official confirmed that the IRS takes the view that US persons are required to file a Report of Foreign Bank and Financial Accounts ("FBAR") with respect to interests in or signatory authority over private investment funds located outside the United States ("Non-US Funds"). A Non-US Fund could include a master fund, a feeder fund, or a stand-alone investment fund. The IRS official stated that this was not a new requirement, but reflected a stronger emphasis on international matters.

Apparently in connection with the foregoing, on June 24, 2009, the IRS issued a new Frequently Asked Question ("FAQ") # 43, available here, regarding the FBAR filings for calendar year 2008 which are due on June 30, 2009. The FAQ states "taxpayers who reported and paid tax on all their 2008 taxable income but only recently learned of their FBAR filing obligation and have insufficient time to gather the necessary information to complete the FBAR, should file the delinquent FBAR report according to the instructions and attach a statement explaining why the report is filed late." Entities and individuals filing the late 2008 FBAR are also required to file a copy of the FBAR together with their previously-filed 2008 tax returns by September 23, 2009, at Internal Revenue Service, 11501 Roosevelt Blvd., South Bldg., Room 2002, Philadelphia, PA 19154, Attn: Charlie Judge, Offshore Unit, DP S-611. The IRS has stated that it will not impose penalties for late 2008 FBAR filings that are filed in accordance with these procedures.

US persons with a financial interest in or signature authority over a Non-US Fund in years prior to 2008 should also file late or amended FBARs for up to six prior years. US persons who failed to file the FBAR for prior years (or filed an FBAR that did not include the Non-US Fund), but reported and paid tax on all taxable income, may file late FBARs for the prior six years by September 23, 2009, following the instructions provided above. Again, the IRS will not impose penalties with respect to prior FBARs that are filed in accordance with these procedures.

Please refer to our prior Email Alert on this topic, available here, which provides additional details on the scope of the FBAR filing generally and as it relates to Non-US Funds.

IRS CIRCULAR 230 DISCLOSURE:

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Authors

Notice

Unless you are an existing client, before communicating with WilmerHale by e-mail (or otherwise), please read the Disclaimer referenced by this link.(The Disclaimer is also accessible from the opening of this website). As noted therein, until you have received from us a written statement that we represent you in a particular manner (an "engagement letter") you should not send to us any confidential information about any such matter. After we have undertaken representation of you concerning a matter, you will be our client, and we may thereafter exchange confidential information freely.

Thank you for your interest in WilmerHale.

I Accept Cancel