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Foreign Bank Account Reporting

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In March 2011, the IRS released a new Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"), and instructions to reflect the final FBAR rules previously issued on February 24, 2011. The final reporting rules may require some individuals and organizations who had not previously filed an FBAR to now file one. Specifically, the final rules clarify that there is no broad exception to the reporting requirements for U.S. persons holding signature authority over but no financial interest in foreign accounts. If subject to the final rules, these individuals, including officers and employees of multinational companies, will need to annually disclose information about the foreign accounts to the Treasury and likely will require assistance from employers for account information needed to comply.

The FBAR rules apply to all U.S. individuals and organizations and across all industries and are not limited to financial services. Compliance with these rules is likely to be a significant undertaking for many organizations. Time is of the essence, because of the effort required to gather required information and to prepare FBAR forms. Penalties associated with failure to report these accounts can be significant and proper preparation is important.

The FBAR is an annual report and must be received by the Department of Treasury on or before June 30 of the year following the calendar year being reported.

Note: On May 31, 2011, the Financial Crimes Enforcement Network (FinCEN) released Notice 2011-1, which extended the time to file a FBAR until June 30, 2012 for a narrowly defined category of individuals with signature authority over foreign financial accounts.

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