# Fbar after receiving CLN



## fsb025

I am a dual citizen french and US living in france. 
I recently received my Certificate loss of nationality from the US embassy. 
I have not yet filled any Fbar 
In order to file my 6 years delinquant fbar what are my options now that i have a CLN. 

thanks


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## Bevdeforges

Well, one "option" is to just forget about the whole thing. Depends to some extent on how many "foreign" (to the US) accounts you have and what the balances are in them. 
Cheers,
Bev


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## BBCWatcher

Bev's suggestion isn't actually _legal_. Let's start with the legal options, shall we? There are two:

1. You can participate in the IRS's Streamlined Program (or another IRS amnesty program). You'd choose this option if you're also late filing IRS tax returns, and the late FBARs (FinCEN Form 114s) are in addition to your tax returns.

2. File 6 late FinCEN Form 114s (2013, 2012, 2011, 2010, 2009, and 2008), plus the 2014 FBAR by June 30, 2015 (on schedule) if you renounced U.S. citizenship in 2014. The form itself gives you a drop-down box to choose why you're filing late. If you have a reasonable, truthful excuse -- "I didn't know" is popular -- the U.S. Treasury is not currently imposing penalties for late, truthful filings.

FYI, you're not actually a dual French and U.S. citizen if you're holding a U.S. Certificate of Loss of Nationality (CLN). You're only a French citizen now. You were a former dual citizen.


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## fsb025

i lived in france since 2003. dual citizen french - us at birth
I have 2 french accounts that were above 10k at some point but less then 50k in the years 2008 -2014. 
In france, the banks might report the balance of december 2014 in the coming months. I received my cln in march 2015 which i gave a copy to the bank
Since I am now a former dual citizen ,after obtainig my CLN, can i still use the streamline program.
I was planning on using the quiet disclosure and sending them with fed ex .
what are the positive /negative in both cases

thanks


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## BBCWatcher

OK, let's take this slowly, in order. There are two separate issues.

First, your U.S. tax returns, filed with the IRS. As a resident of France it is _unlikely_ you owe U.S. tax. The penalty for failing to file a U.S. tax return if you genuinely owe zero U.S. tax is zero. However, if you have not filed all your U.S. tax returns due, and you have late tax returns, then you can consider participating in the IRS's Streamlined Program to get caught up. If you renounced U.S. citizenship in 2015 then you will also need to file a 2015 U.S. tax return next year (before the deadline in 2016), and that final U.S. tax return will be your "dual status" tax return. (If you renounced in 2014 then 2014 is your last tax year, with your dual status return.)

Second, there is FinCEN Form 114 ("FBAR"). There is actually an official, published penalty if you fail to file that form when required to file it -- failure to file is an actual penalty problem/risk, for everyone required to file that report. It sounds like you were required to file it, so the only legal option is to get caught up. It turns out that filing your late FBARs is the same process whether or not you participate in the IRS's Streamlined Program. You just file them. You don't use FedEx -- FBARs are filed electronically.

So, to get caught up, you'd file 2008, 2009, 2010, 2011, 2012, and 2013 FBARs. For those late FBARs you'd choose the truthful option in the form that describes why you're late. (Yes, they ask for an explanation why you're filing late, right in the form.) Then you'd also file the 2014 FBAR by June 30, 2015 (which is not late yet). (And you'll file your 2015 FBAR by June 30, 2016, if you renounced in 2015. Then 2015 would be your last FBAR.) Yes, you're quite right that the U.S. Treasury could start receiving account data on you, but even if they aren't getting account data the only _legal_ option is to get caught up. Theoretically penalties could be imposed if they contact you first.


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## Bevdeforges

Have you been asked by any of your banks to provide a W-9? Were you born in the US? Those are reasonably good indicators that your bank may provide FATCA information on you or your accounts to the Banque de France - which may then pass that information along to the IRS.

However - the fact that you are an EX-US citizen, and that this is really the start-up year for all this reporting, it's not terribly likely the IRS/Treasury is going to spend all that much time and effort going through back filings and old compliance issues. 

Legal or not, I don't think you're exactly in the IRS crosshairs, though if they do decide you're a threat to whatever, they'll be in touch and chances are you can resolve any issue by simply giving them the information (or forms) they want when they ask for them.
Cheers,
Bev


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## ForeignBody

fsb025 said:


> I am a dual citizen french and US living in france.
> I recently received my Certificate loss of nationality from the US embassy.
> I have not yet filled any Fbar
> In order to file my 6 years delinquant fbar what are my options now that i have a CLN.
> 
> thanks


You are only asking about FBAR's. They are so easy to file I can't see why you should not go ahead and file them and be finished. You will also need to file for 2015 next year if your accounts exceeded the limit in 2015 before your CLN.


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## BBCWatcher

For the record, the CLN all by itself triggers notice to the IRS.

I agree with ForeignBody. I see no point risking FBAR penalties, whatever level of risk it is in particular circumstances. Any such risks are entirely avoidable at zero cost except an hour or two of time filling in and filing the forms.


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## fsb025

In form 8854, i need to certify that i am tax complient for the past 5 years :1040 ect, can i fill also only 5 years in fbar or will they require 6 ie 2014 -2010


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## BBCWatcher

OK, it's really two questions you've got packed into one.

1. Yes, IRS Form 8854 requires you to certify you've been (and are) tax compliant for the past 5 years. So yes, that requires that all FBARs (FinCEN Form 114) _for that entire period_ are truthfully and correctly filed in order to make a truthful declaration on that form.

2. _Regardless of IRS Form 8854's certification_, you still may have legal responsibilities and liabilities. Renunciation of U.S. citizenship does not terminate any of those past liabilities. Notably, the statute of limitations on FinCEN Form 114 improper non-filing is 6 years, not 5. So to satisfy Form 8854 you need 5 (or, more precisely, to cover the 5 year term that form requires), but Form 8854 does not represent coverage of all your legal liabilities.

As another example, if you didn't file a tax return 7 years ago, and you owed U.S. tax, in principle that legal liability is still outstanding. Form 8854 or not, renounced or not, the IRS could go after you to collect. Form 8854 is not a "get out of jail free" form, in other words. It's just one tax filing requirement among many, a filing requirement that uniquely applies to renunciants, and it doesn't change or replace anything else.


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## maz57

Others have covered quite a bit of ground but I can add a few comments:

1. You officially lost your US citizenship the day before you swore the oath of renunciation; the date you actually received your CLN isn't relevant.

2. If the date you lost US citizenship was in 2014, you have until June 15 of this year to file your final tax paperwork. If that date was in 2015 you can't finish things off until 2016.

3. Because you were a dual from birth you are not subject to the exit tax regardless of your net worth. (Unless you fail to file all the final exit tax paperwork and turn yourself into a "covered expatriate".)

4. If you choose the Streamlined Program to get caught up on your filings that will require 3 years of back returns and 6 FBARs plus the current year for both. Because Form 8854 requires you to certify 5 years of tax return compliance you can just add 2 more years of returns to your streamlined package and wind it all up in one submission. Even if you just do a "quiet disclosure" you will still need those five back returns so you can do the 5 year certification. As others have said, the safest option is to just do it all "by the book". 

5. The Form 8854 exit tax return makes no mention of and is not dependent on your FBAR situation. Many have filed Form 8854 and never filed an FBAR with no problems.

6. My take on all of this: either do it all by the book or don't do anything at all, dust your hands off, and walk away a free person. It kind of depends on just how disgusted you are by the whole situation. Unless you are a billionaire it is extremely unlikely they will bother you.


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## BBCWatcher

maz57 said:


> Because you were a dual from birth you are not subject to the exit tax regardless of your net worth. (Unless you fail to file all the final exit tax paperwork and turn yourself into a "covered expatriate".)


There's also a specific residence requirement to qualify for that particular Expatriation Tax exception.


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## fsb025

I plan to do a quiet disclosure. Since i received my CLN in march 2015, and i have until 2016 to finish things off, can i fill 5 years fbar now and in april / june 2016 fill the fbar from jan till march 2015 making it year 6 for the fbar.


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## Madonna

fsb025
Your CLN was received in March 2015, but when did you go to the consulate to renounce? What is the date on your CLN? If it's in 2014, then you have to file in 2015 for 2014!! I went to the consulate last September and received my CLN this March. I just finished sending off all my filings for 2014. Your date of renunciation is what you go by, not when you received the CLN!


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## fsb025

I went to the consulate to renounce in February 2015 and received my CLN by fedex on march 2015 (1 month). 
If i fill 5 years fbar, can the period from jan to feb 2015 to be fill ??(this year or next year) be considered as the 6th year even-though I am only going to fill 2 months?


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## maz57

Congratulations! Only one month between swearing the oath and receiving your CLN has got to be some sort of a record.

If you are doing a QD I think you can be way less fussy about the FBARs. The six years they ask for in the Streamlined Procedure is way overkill but those are the rules. What could be more useless information than how much and where money was 6 years ago? 

For a QD there aren't any rules so I'd do just one FBAR for 2014; you have ample time to file it by the June 30 deadline. If they want more they will ask for it. (They won't.) 

Likewise, on the tax return side you have until June 15 to get your 2014 return filed.
Then sometime in the second half of 2015 you can file 4 back returns (2010,11,12,13). For your final filing you can do a 1040 for Jan-Feb 2015 plus Form 8854 (where you certify the 5 years of filing compliance). You could do a Jan-Feb 2015 FBAR if you are in the mood, but why bother? By the time June 30, 2016 FBAR deadline comes around you will be long gone. Unless you are a billionaire no one cares, not even the IRS.


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## Madonna

From what I understand, the reporting forms (FBARs, etc.) are part of the filing compliance. So to certify 5 years compliance on the 8854, you would need to have filed at least 5 years of FBARs along with the 1040s and any other forms required for your circumstance.

fsb025 - I think that doing the FBAR in 2016 for 2015 for just the 2 months is fine. I'm not an expert, but to be on the safe side I did file an FBAR for 2014, just the other day, even though I have had my CLN since March. Logging out of the IRS is separate from logging out of citizenship. You're not done, until you've also logged out of the IRS. And congratulations on getting your CLN so fast!!


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## BBCWatcher

There is a 6 year statute of limitations on FinCEN Form 114 (FBARs), so (legally) Treasury can still go after you for the 2008 FBAR at this writing. The CLN issuance generates a notice to the IRS/Treasury that you exist. So you came "up on the radar" (if you weren't already) earlier this year.

I would file your late FBARs now, before Treasury has even the chance to contact you first. You're _already_ FBAR delinquent, and you're also known (CLN) -- bad combination. You can't change the latter, so I'd change the former as quickly as possible.


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## maz57

Madonna said:


> From what I understand, the reporting forms (FBARs, etc.) are part of the filing compliance. So to certify 5 years compliance on the 8854, you would need to have filed at least 5 years of FBARs along with the 1040s and any other forms required for your circumstance.
> 
> fsb025 - I think that doing the FBAR in 2016 for 2015 for just the 2 months is fine. I'm not an expert, but to be on the safe side I did file an FBAR for 2014, just the other day, even though I have had my CLN since March. Logging out of the IRS is separate from logging out of citizenship. You're not done, until you've also logged out of the IRS. And congratulations on getting your CLN so fast!!


Form 8854 asks you to certify 5 years of tax compliance but does not mention FBAR. FBAR falls under a different section (Title?) of US law. One can be tax compliant but not FBAR compliant so you can truthfully certify re: tax compliance. Phil Hodgen covered this in detail. Of course, there is no harm in filing FBARs; it depends on how cranky you are. In my case I was plenty cranky. Never heard a word from the IRS.

I agree there should be no problem with filing an FBAR for the 2 months of 2015 the person was still a US citizen. Chances are it wouldn't be much different from the 2014 FBAR.


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## maz57

BBCWatcher said:


> There is a 6 year statute of limitations on FinCEN Form 114 (FBARs), so (legally) Treasury can still go after you for the 2008 FBAR at this writing. The CLN issuance generates a notice to the IRS/Treasury that you exist. So you came "up on the radar" (if you weren't already) earlier this year.
> 
> I would file your late FBARs now, before Treasury has even the chance to contact you first. You're _already_ FBAR delinquent, and you're also known (CLN) -- bad combination. You can't change the latter, so I'd change the former as quickly as possible.


Realistically, there is virtually zero chance the US government would go after a French (ex-US) citizen residing in France for failing to file an informational form. Even if they did and they assessed a penalty that person could safely ignore them. The reach of the US government into other countries is greatly exaggerated.

As I said before, it depends on how happy the ex-citizen is with the US government. Generally a person who has been forced to renounce is not very happy (except for the fact that they are finally free from this ongoing BS.) Come to think of it, I guess the SOL is still running on a few years of my own FBARs but I'm not losing any sleep over it.


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## Pacifica

maz57 said:


> Form 8854 asks you to certify 5 years of tax compliance but does not mention FBAR. FBAR falls under a different section (Title?) of US law. One can be tax compliant but not FBAR compliant so you can truthfully certify re: tax compliance. Phil Hodgen covered this in detail.


Here’s the link to the Hodgen article you mention that goes into detail on that, "Expatriate without filing FBARs? Sure thing".


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## BBCWatcher

I agree with Hodgen's logic, but he hasn't demonstrated that Title 26 never refers to Title 31. If Title 26 refers to Title 31, then "tax obligations" includes Title 31 through reference. Absent a thorough check of all of Title 26, I wouldn't bet heavily that it doesn't. (On edit: A very cursory search suggests that Title 26 refers to Title 31 at least 32 times. I haven't dug into those references yet and don't plan to, but Hodgen apparently never thought of going even as far as I just did. He should have.)

But that doesn't actually matter here except within the narrow zone of Form 8854 compliance. A CLN triggers public notice. The IRS and Treasury can decide to do what they want with that information.

In my view if you're going to clean up your delinquent FBARs, do it now, before the Treasury even has much of a chance to send a letter. I agree the probability is slim, but slim isn't zero. I have no idea what the benefit is to waiting to cleaning up the delinquent FBARs. Sure, if you've got a medical emergency to attend to, attend to that first, but there's no upside in waiting here.


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## fsb025

*Filing 5 years delinquant 1040 after receiving CLN using quiet disclosure:*
Can the Foreign Earned Income Exclusion still be used for 2014 and privious years for someone that just received their CLN ? to be sent before june 15 2015.
For self employee, what other deduction may apply for the 1040 form
thanks


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## BBCWatcher

Yes. Review IRS Publication 519 and follow the instructions related to "dual status alien" for your "exit" tax year (the tax year when you start as a U.S. citizen and convert to a non-resident alien through renunciation). You file both 1040NR and 1040, but one is filed as an attachment to the other.


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## fsb025

How about for 2010 till 2013, is there any reference that would disquilify using the Foreign Earned Income Exclusion if the CLN is received before filing the 5 years delinquant 1040 using quiet disclosure


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## BBCWatcher

If you genuinely qualified for the Foreign Earned Income Exclusion in those years, then subsequent loss of U.S. citizenship doesn't change that fact.

Why, what do you have in mind?


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## fsb025

I was reserching the possibility if the loss of U.S. citizenship does allow then to reject the Foreign Earned Income Exclusion claming that the filling was performed after receiving a CLN.
Perhaps another way to limit/delay the request for applying for a CLN...
Is there any articles supporting / negating the above?


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## Bevdeforges

There is a huge difference between renouncing your citizenship and "losing" your citizenship (usually because of some act for which they would take your citizenship away from you - though those a few and far between nowadays). 

If you're obligated to file a US tax return for a given year, what you can and can't take in terms of deductions, exclusions, exemptions, etc. is generally based on what your status was during that tax year, no matter when you're actually doing the filing.
Cheers,
Bev


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## BBCWatcher

I'm not following you, Fsb025. Would you care to explain that again in some different words and/or in a different way? What's the situation?


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## fsb025

error - delete this


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## fsb025

About a week ago, a friend went to see a tax specialist in florida and it was mentioned that if someone sends in their delinquant 1040 files (5 years worth) after receiving their cln, the irs can deny the Foreign Earned Income Exclusion for 2013 and privious years. 
I was reserching to see if any laws have been modified recently and any irs / legal web page that confirms or deny.


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## BBCWatcher

I've never heard of that, and I cannot find anything as you describe. It is true that you cannot take the Foreign Earned Income Exclusion for the 1040NR (non resident alien) portion of your dual status tax year. But that's not retroactive. The FEIE is allowed prior to renunciation/loss of citizenship if you qualified per normal rules. The FEIE doesn't actually make sense on a 1040NR since foreign income is already exempted.

The IRS can, of course, deny the FEIE if you didn't qualify for it. A CLN results in notice to the IRS of the existence of the individual, so perhaps the IRS took a closer look at the taxpayer and found a fraudulent (or at least suspicious) FEIE claim in the past.


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## jbr439

BBCWatcher said:


> I've never heard of that, and I cannot find anything as you describe. It is true that you cannot take the Foreign Earned Income Exclusion for the 1040NR (non resident alien) portion of your dual status tax year. But that's not retroactive. The FEIE is allowed prior to renunciation/loss of citizenship if you qualified per normal rules. The FEIE doesn't actually make sense on a 1040NR since foreign income is already exempted.
> 
> The IRS can, of course, deny the FEIE if you didn't qualify for it. A CLN results in notice to the IRS of the existence of the individual, so perhaps the IRS took a closer look at the taxpayer and found a fraudulent (or at least suspicious) FEIE claim in the past.



FWIW, I have heard of someone being denied the use of the FEIE for all of their dual status year, not just the NRA part of that year.


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## BBCWatcher

jbr439 said:


> FWIW, I have heard of someone being denied the use of the FEIE for all of their dual status year, not just the NRA part of that year.


Check the rules. I've checked, and the IRS does not permit taking the FEIE on income for the 1040NR period in a dual status tax year, exactly as I wrote. _But it doesn't matter_ because such income is already exempt, so why would you even go to the trouble of taking the FEIE on such income?

Reference: IMM 3.38.147.10 item 10, quoted here in its entirety for convenience: _ Dual-Status taxpayers with a valid Form 2555 and Form 2555-EZ, Foreign Earned Income Exclusion, Housing Deduction, and/or Housing Exclusion may exclude income on Form 1040 whether it is the controlling document or statement. Income earned during Form 1040NR period may not be excluded with Form 2555 and Form 2555-EZ. All income should be brought forward to the controlling document and the tax figured on Form 2555 tax worksheet, regardless if the controlling document is Form 1040 or 1040NR._


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## jbr439

BBCWatcher said:


> Check the rules. I've checked, and the IRS does not permit taking the FEIE on income for the 1040NR period in a dual status tax year, exactly as I wrote. _But it doesn't matter_ because such income is already exempt, so why would you even go to the trouble of taking the FEIE on such income?
> 
> ...


Note that I said all of their dual status year, not just the NRA part of it. I.e., the person could not use the FEIE on the part of the year when they were still a US citizen.


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## BBCWatcher

Jbr439, then cite something written by the IRS if you're making a different assertion about some particular tax treatment. I provided a specific citation above about how the FEIE works in a dual-status tax year, such as the tax year in which an individual renounces U.S. citizenship.


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## jbr439

BBCWatcher said:


> Jbr439, then cite something written by the IRS if you're making a different assertion about some particular tax treatment. I provided a specific citation above about how the FEIE works in a dual-status tax year, such as the tax year in which an individual renounces U.S. citizenship.


I have nothing to cite. I'm just repeating what I read. I know others have successfully used the FEIE for the portion of the year they were US citizens.


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## BBCWatcher

jbr439 said:


> I have nothing to cite. I'm just repeating what I read. I know others have successfully used the FEIE for the portion of the year they were US citizens.


Yes, the FEIE is permitted for the portion of the year when former U.S. citizens were U.S. citizens, as the citation I provided indicated, and as I wrote. You wrote the opposite upthread.

Well then, if you're agreeing with me now, then we agree.


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## Bevdeforges

jbr439 said:


> Note that I said all of their dual status year, not just the NRA part of it. I.e., the person could not use the FEIE on the part of the year when they were still a US citizen.


That may depend on whether or not the person was qualified to take the FEIE at all at that time. If they couldn't qualify based on time spent outside the US or something like that, then it's not the renunciation that prevented them from taking the FEIE. 
Cheers,
Bev


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