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Changes to US Treasury Department Reporting Requirements

Subject: Reporting Number: 09-01 Date: 1/28/2009

You should be aware of the expanded base of those who are required to file these forms and the IRS’ stated zero tolerance policy

United States Treasury Form TD F 90-22.1 is required to be filed annually by any US. person who has a “financial interest” in or “signature authority” or any “other authority” over financial accounts located outside the United States and where the accounts, in aggregate, exceed USD 10,000 at any time in the year. You are probably aware that a US citizen, living in Canada, has to file these forms for RRSP and bank accounts.

The rules have recently been expanded to include more filers. In addition to US citizens or residents, the form must now by filed by self-employed nonresidents engaged in US business, and foreign corporations with a US presence that have US employees with relevant signing authority. It may also apply to non-US resident partners of any partnership engaged in a US business.

An individual or a branch of a Canadian or other non-US entity that is doing business in the United States is now also required to file this report.

The reportable amount is now the highest value in the account at any time during the calendar year translated into US dollars at the December 31 exchange rate. The deadline for filing is June 30th, with no extensions.

Disclosure is mandatory. Civil and criminal penalties can be assessed for failure to file the form, to supply information, or for filing a false or fraudulent report. The penalty for a non-willful failure to file the form can be up to USD 10,000.

“Willful” violations are subject to increased penalties (50% of the account balance with a minimum penalty of $100,000 per account). Criminal violations are subject to even greater penalties.

While, in the past, the Treasury Department has not actively enforced the rules, their approach may be changing. The IRS is on record as stating that they will begin to assess penalties for failure to file information returns related to foreign entities and transactions.

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