Concessions For Delinquent Information Returns Pertaining To Certain Offshore Investments Other Than FBAR Form TD F 90-22.1

The IRS has indicated that it will waive failure to file

penalties with respect to delinquent Forms 5471 and similar

information returns, in situations where foreign income has been

reported and taxes paid, provided such filings are made by

September 23, 2009.

Any U.S. person having a financial interest in or authority over

a foreign financial account during a calendar year is required to

file an information report with the U.S. Department of the Treasury

by June 30 of the following year. The information is reported

through filing Form TD F 90-22.1 (Report of Foreign Bank and

Financial Accounts or FBAR). The FBAR reporting requirements apply

to any foreign accounts where the aggregate balance exceeds $10,000

at any time during the year. In an effort to encourage voluntary

compliance by non-filers, the Internal Revenue Service (IRS)

announced a program to centralize the civil processing of offshore

voluntary disclosures and to offer a uniform penalty structure to

taxpayers using undisclosed foreign accounts and undisclosed

foreign entities to avoid or evade tax. As part of this initiative

the IRS indicated that it would permit certain taxpayers, who had

reported and paid tax on all their taxable income for prior years

but had not complied with their FBAR reporting obligations, an

opportunity to file their delinquent Forms TD F 90-22.1 (including

any filings due on June 30, 2009), without penalty as late as

September 23, 2009. On August 7, 2009, the IRS issued Notice

2009-62, 2009-35 IRB 1, further extending the deadline to June 30,

2010, in the two limited cases of:

Persons with no financial interest in, but with signature

authority over, a foreign financial account

Persons having a financial interest or signature authority over

a foreign financial account in which assets are held in a

commingled fund

There has been considerable discussion within the tax community

regarding the persons required to file FBARs and the scope of the

items required to be reported. The IRS has provided guidance in the

form of frequently asked questions and answers (FAQs), that can be

found at http://www.irs.gov/newsroom/article/0,,id=210027,00.html

(initially posted May 6, 2009, (Q & A 1-30) and subsequently

modified and supplemented on June 24, 2009, (modifying A26 and

adding Q&A 31-51)). For more information regarding the persons

impacted by the FBAR filing requirement and current guidance

regarding the scope of the required disclosure, see McDermott's

On the Subject "

Foreign Financial Account Holders:Prepare to File" dated

May 16, 2006, McDermott's On the Subject "

Recent Developments Encourage Voluntary Correction of Foreign

Financial Account Reporting Violations," dated April 14,

2009, and McDermott's On the Subject "

Deadline Extended for Some Taxpayers Who Recently Learned of the

FBAR Reporting Requirement," dated July 29, 2009.

A less publicized feature of this guidance is its coverage of

information returns other than Form TD F 90-22.1.

In its supplementary list of FAQs (see FAQ 42), the IRS has

indicated that it would waive failure to file penalties, not only

with respect to FBARs, but also with respect to "tax

information returns, such as Form 5471 [Information Return of U.S.

Persons With Respect to Certain Foreign Corporations] for

controlled foreign corporations (CFCs) or Form...