The Controversy Over FBAR Reporting
Until recently, it had never been supposed that IRS Form TD F 90-22.1, commonly referred to as the "FBAR", required reporting of investments in hedge funds or private equity funds that are organized under foreign law. However, in October 2008, the IRS revised its instructions to the FBAR to include interests in mutual funds. This and certain statements by the IRS have resulted in widespread speculation that interests in foreign hedge funds and perhaps even in foreign private equity funds are subject to FBAR reporting. The attached memorandum addresses the controversy over FBAR reporting.