Tax Notes has published an article by Lee A. Sheppard, tax analyst, who examines the regulatory power held by the IRS in the FBAR area and any FBAR compliance issues related to hedge funds and their investors. FBAR refers to foreign bank account reports. The purpose of such reports is for the government to know who owns foreign accounts and to put this information into databases for law enforcement purposes. Although the IRS cannot write FBAR regulations, it does have the authority to interpret FBAR regulations in an active manner. Recently the IRS has included hedge funds under the umbrella of FBAR regulations. Hedge fund managers and their clients feel this type of regulation is unnecessary as hedge funds are generally illiquid accounts associated with certain lockups. However, Mr. Sheppard believes that the IRS is acting in an appropriate manner given the state of financial markets just a few short months ago, a state brought on by over-zealous investors and fund managers.
See Lee A. Sheppard, "News Analysis: FBAR Filings for Hedge Funds," 3 2009 TNT 151-3, August 6, 2009.
Posted by Raj Chudgar, Associate Editor, Wealth Strategies Journal.
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