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Sunday, February 22, 2009


U.S. persons with interests in or signature authority over foreign accounts are generally required to report those interests to the Treasury Department on Form TD F 90-22.1 (commonly referred to as the 'FBAR'). Internal Revenue Code definitions of "U.S. person" do not apply, and the definition includes persons in and doing business in the U.S., even if not a citizen or resident of the U.S. Failure to report can result in significant penalties.

One problem with this requirement is that the Instructions to the form provide no guidance as to what constitutes "doing business in the U.S." for this purpose. The applicable form language reads:

The IRS has now published a FAQ that provides guidance on when a person will be considered to be doing business in the U.S. Q&A 4 in this guidance provides:
  1. The determination is a facts and circumstances test.

  2. Regular and continuous business activities in the U.S. are needed.

  3. Merely visiting the U.S., or sporadically conducting business in the U.S., will not be enough.

  4. Artists, athletes, and entertainers who are not citizens or residents of the United States and who only occasionally come to the United States to participate in exhibits, sporting events, or performances, will not be considered to be conducting business in the U.S.

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