Presenting a live 110 ‐ minute teleconference with interactive Q&A Report of Foreign Bank and Financial Accounts: Preparing for 2011 Filing Latest Developments and Practical Lessons From 2010 Compliance WEDNESDAY, FEBRUARY 9, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Igor Drabkin, Principal, Holtz Slavett & Drabkin , Beverly Hills, Calif. Igor Drabkin Principal Holtz Slavett & Drabkin Beverly Hills Calif Steven Toscher, Principal, Hochman Salkin Rettig Toscher & Perez , Beverly Hills, Calif. Scott Fink, Greenberg Traurig , New York Shannan Cuddy, Tax Counsellor, Moody Famiglietti & Andronico , Tewksbury, Mass. Shannan Cuddy, Tax Counsellor, Moody Famiglietti & Andronico , Tewksbury, Mass. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at1-800-926-7926 ext. 10 .
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Report of Foreign Bank and Financial A Accounts: Preparing for 2011 Filings t P i f Fili Webinar Feb. 9, 2011 Scott Fink, Greenberg Traurig Shannan Cuddy, Moody Famiglietti & Andronico finks@gtlaw.com scuddy@mfa-cpa.com Igor Drabkin, Holtz Slavett & Drabkin Steven Toscher, Hochman Salkin Rettig Toscher & idrabkin@hsdtaxlaw.com Perez toscher@taxlitigator.com
Today’s Program Relevant Background With FBAR Slide 6 – Slide 32 [S cot t Fink, S hannan Cuddy] Compliance Experiences From 2010 FBAR Filings Slide 33 – Slide 52 [S cot t Fink, Igor Drabkin] Civil Litigation Over FBAR Slide 53 – Slide 59 [Igor Drabkin] Criminal Prosecutions Over FBAR Slide 60 – Slide 83 [S t even Toscher] Slide 84 – Slide 97 FATCA Sect. 6038D Information Return [S t even Toscher, S hannan Cuddy]
Scott Fink, Greenberg Traurig S Fi k G b T i Shannan Cuddy, Moody Famiglietti & Andronico RELEVANT BACKGROUND RELEVANT BACKGROUND WITH FBAR
Material Aspects Of The Report Of Foreign Bank And Financial Accounts (FBAR) (FBAR) History Bank Secrecy Act of 1970 requires U S persons to file Bank Secrecy Act of 1970 requires U.S. persons to file reports and keep certain records of information about their foreign accounts. Authority to enforce FBAR reporting and record keeping Authority to enforce FBAR reporting and record keeping requirements was delegated to FinCEN, a bureau of the Treasury Department. In April 2003 FinCEN delegated the civil enforcement In April 2003, FinCEN delegated the civil enforcement authority of FBARs to the IRS. IRS can impose civil penalties. IRS was tasked with revising FBAR form and instructions. FBAR Form TD F 90-22.1 and its instructions were revised in October 2008. 7 - 7 -
Who Must File An FBAR? Each U.S. person who has a financial interest in or p signature or other authority over a foreign financial account must make a report of those relationships on an FBAR for each calendar year during any part of which the aggregate value of all the accounts exceeded $10,000. $ The FBAR must be filed with the Treasury Department on or before June 30 of the succeeding year. b f J 30 f th di g There is no extension available for filing an FBAR. 8 - 8 -
Who Must File An FBAR? (Cont.) Exceptions An officer or employee of a bank that is currently examined by federal bank supervisory agencies for soundness and safety is not required to report having signature or other authority over a foreign account maintained by the bank, if the officer or employee has no personal interest in the account. An officer or employee of a domestic corporation whose l d h equity securities are listed on a national exchange, or that has assets exceeding $10 million and at least 500 shareholders, is not required to report on an FBAR having shareholders, is not required to report on an FBAR having signature or other authority over a foreign account of the corporation, if the person has no personal financial interest in the account and has been advised by the CFO of the corporation that the corporation has reported the account ti th t th ti h t d th t on an FBAR. This exception also applies to an officer or employee (i) of a domestic subsidiary of a domestic corporation and (ii) of a foreign subsidiary subsidiary of a domestic corporation, and (ii) of a foreign subsidiary more than 50% owned by a domestic corporation. 9 - 9 -
Key Definitions On TD F 90-22.1 U.S. person □ The 2008 revised FBAR instructions define a U.S. person as a citizen or resident of the U.S., or a person in and doing business in the U.S. □ Previous instructions defined a U.S. person as a d f d S citizen or resident of the U.S., a domestic partnership, a domestic corporation, or a p p, p , domestic estate or trust. 10 - 10 -
Key Definitions On TD F 90-22.1 (Cont.) Financial account FBAR instructions define a financial account to include any □ bank securities securities derivatives or other financial bank, securities, securities derivatives or other financial instrument accounts. The term includes any savings, demand, checking, deposit or other account maintained with a financial institution or other person engaged in the business of a financial institution business of a financial institution. The instructions provide that a financial account generally □ includes accounts in which the assets are held in a commingled fund, with the account owner holding an equity commingled fund with the account owner holding an equity interest in the fund. Public comments by IRS officials after the issuance of the □ 2008 Form TD F 90-22.1 and its instructions indicated that 2008 Form TD F 90 22.1 and its instructions indicated that foreign hedge funds and private equity funds were foreign financial accounts. Individual bonds, notes or stock certificates; and safe , ; □ deposit boxes are not defined as financial accounts. 11 - 11 -
Key Definitions On TD F 90-22.1 (Cont.) Financial interest Financial interest U.S. person has a financial interest in each financial account □ where such person is the owner of record or has legal title, whether the account is maintained for his or her own benefit or for the benefit of others. U.S. person deemed to have a financial interest over financial □ accounts if the owner of record or holder of legal title is: A person acting as an agent, nominee, attorney or in some other A i i i h capacity on behalf of the U.S. person; A corporation in which the U.S. person owns directly or indirectly more than 50% of the total value of shares of stock, or more than 50% of the voting power for all shares of stock; 50% of the voting power for all shares of stock; A partnership in which the U.S. person owns more than 50% of the profits or the capital of the partnership; A trust in which the U.S. person either has a present beneficial A trust in which the U.S. person either has a present beneficial interest in more than 50% of the assets or receives more than 50% of the current income. A bank is not required to file an FBAR to report a financial □ interest in an international interbank transfer account interest in an international interbank transfer account (“nostro” accounts). 12 - 12 -
Key Definitions On TD F 90-22.1 (Cont.) Signature authority A U.S. person has account signature authority if that □ person can control the disposition of money or other property in the account by delivery of a document p p y y y containing his signature. Other authority Where a U.S. person can exercise power that is □ comparable to signature authority over an account by comparable to signature authority over an account by communication with the bank 13 - 13 -
IRS Guidance Granting Temporary Relief Revised FBAR form and instructions and IRS Revised FBAR form and instructions and IRS public comments created uncertainty regarding who is a U.S. person and what is a financial account. In response to numerous questions and comments received from the public, the IRS issued guidance granting temporary relief. issued guidance granting temporary relief. 14 - 14 -
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