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Investment Adviser Group Seeks Exemption From FBAR Filing Requirements

OCT. 5, 2009

Investment Adviser Group Seeks Exemption From FBAR Filing Requirements

DATED OCT. 5, 2009
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October 5, 2009

 

 

VIA email to: Notice.Comments@IRSCounsel.treas.gov

 

 

Copy email to: regcomments@fincen.gov

 

 

RE: Notice 2009-62

 

 

Cedar Hill Associates, LLC, a Registered Investment Adviser, manages money for individuals and their retirement plans, including IRA's, self directed 401-K plans, and pension/profit sharing plans. Our offerings include proprietary hedge Funds of Funds. Our structure involves the use of a master feeder fund that feeds into an onshore fund for taxable clients and offshore funds for deferred taxation accounts as described above. Our offshore funds have no offshore investors (in the sense of non-US entities), nor any foreign bank accounts, but invest in commingled offshore hedge funds.

As we understand the proposed FBAR requirements, our Master feeder and offshore funds will have to file reports along with the general partner of our funds AS WELL AS ALL OUR INDIVIDUAL INVESTORS WHO ARE TAX DEFERRED ENTITIES.

Further, it is our understanding that a punitive measure for non-filing by June 30th of 2009 will be put in place that would require OUR TAX DEFERRED INVESTORS TO FILE BACK TAX RETURNS FOR FIVE YEARS TO SEPARATE IRS OFFICES. If this were implemented, it would destroy our client relationships as a result of the extra expense and aggravation they would incur. It was impossible for our firm to convey to our clients and their attorneys the need to file prior to June 30, 2009.

We question the goal of the proposed regulations. Our investors are not taxpayers under current law and it is a well-defined principal that by investing in off shore vehicles, tax-deferred investors are not subject to Unrelated Taxable Business Income.

We urge that investments in foreign commingled funds not be subject to FBAR filings and that this be clearly expressed in the IRS final ruling. Should the IRS decide, however, that tax deferred investors in foreign commingled funds be required to file an FBAR, filings should be prospective. Nothing is gained by putting tax-deferred investors "through the hoops" with no revenue benefit to the Treasury/IRS.

We appreciate the opportunity to be able to comment on this proposal.

[signed]

 

 

Cedar Hill Wealth Management

 

Chicago, Illinois
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