The question is whether, in the year of expatriation, you must file the dreaded FBAR, now named FinCen Form 114.

I sent an email to this IRS recommended address: FBARquestions@irs.gov. Here follows the reply I received. Its beauty might appeal to you. It is a record of incomprehension and increasing anxiety from both parties. I am being told that the FinCen 114 is not needed in the year of expatriation.
 BUT.......

My email correspondent could not have been clearer in her questions to the IRS.

—–Original Message—– From: Name Removed Sent: Day 1 To: *SBSE FBAR Form Subject: filing requirements

I expatriated in 2014. I am no longer a US person. Am I required to file a FBAR in 2015 for 2014? If there is a requirement to report, please let me know where the regulation can be found so that I can give the information to others in my position.

Thank you for your help.

The answer comes back a day later:

On Day 2, IRSEmployeeName wrote:

If someone is no longer a U.S. citizen or resident at any time in 2014, then that person would have no obligation to file an FBAR to report foreign accounts held during the 2014 calendar year.

IRSEmployeeName Tax Law Specialist CTR Operations BSA Department Voice (123) 456-7890

My correspondent answers more or less immediately:

On Day 2, Taxpayer wrote:

Thank you, IRSEmployeeName.

This sentence could be read either way…can you be clearer for me? I was not a citizen at the end of 2014, therefore I do not need to file OR I was a citizen at the beginning of 2014, so I do need to file.

That's it exactly. IRSEmployeeName did not answer the question. My correspondent's question is the accurate one: does the fact that she was a citizen for some (but not all) of the days in 2014 create a filing requirement for the FBAR?

The filing requirement is clear. The way the rules are written, the filing requirement is triggered if a U.S. person, at any time in the year, had certain types of foreign financial accounts. An expatriate would satisfy those rules, so the FBAR (FinCen Form 114) is technically required.

So the short answer to the question is yes, you should file a 2014 FinCen Form 114.

What Goes On It? Not Clear

The next logical question is whether you have to report information to the U.S. government that occurred after you renounced your U.S. citizenship. Let's say you open a new bank account the week after expatriation. Is that bank account listed on the FBAR for 2014? It seems kind of dumb and pointless, doesn't it?

Form 8938 is another form that requires you to report foreign financial assets. In this case, the IRS has made it clear that if you are a part-year resident, you only report on Form 8938 for January 1 until the date that you cease residency. Thus, an expatriate would only complete Form 8938 with information through the renunciation date. Anything after that date can be left off.

There is no similar declaration of simplicity by the IRS for FinCen Form 114. The triggering conditions for filing (a U.S. person with foreign financial assets) exist, but there is silence (so far as I know, at least) on whether the reporting requirement covers only the days in which you are a U.S. citizen or resident.

At some point you should expect the IRS to issue some type of edict that is consistent with the Form 8938 philosophy of life. But it hasn't done so yet.

This leaves you in an uncomfortable position:

• Do you complete FinCen Form 114 and give the IRS the full information about everything that existed in 2014? Or
• Do you complete FinCen Form 114 and give the IRS information for everything that existed up until your renunciation date?

Why This Is A Problem

I will leave it to my correspondent to explain why this is a problem:

The IRS has all of my personal information on the invasive 8938, so filing my personal information is only a time commitment, whatever I might think of the obligation…I'll spare you my detailed thoughts on the matter. There is, however, a difficult position with a clutch of accounts in trust for vulnerable people for which I am a signatory: British settlor, British trust paying British tax, British investments, British accounts, British beneficiaries…. all under British law which has rather a lot to say about privacy. There was a certain amount of surprise when I explained the situation to my fellow trustees. Oh, well. I shall negotiate. Not, obviously, with the US Treasury.

This is consistent with our experience. People generally fill in the FBAR form in full for the whole year of expatriation, and just layer one more epithet on those previously hurled at the IRS.

But sometimes there are problems created for other people, or problems created for the expatriate under the other country's laws.