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Tax Delinquents May Have Passports Cancelled – Take 2!



Ronald Marini picture34

We previously posted on Thursday, May 31, 2012 Tax Delinquents May Have Passports Canceled & Be Questioned at Air & Sea Ports  where we discussed that almost unnoticed, Congress is close to approving a law under which the Internal Revenue Service (IRS) will be able to revoke the passports of Americans who owe substantial unpaid taxes. Nothing has happened until now.

A GAO report found that for the 2008 tax year, the State Department issued passports to more than 224,000 citizens who owed about $6 billion in tax. Most of it was for individual income taxes, and nearly two-thirds was more than three years old.  The biggest Tax Debtor owed $46.6 million and was part-owner of a professional sports team. Another owed nearly $40 million and had traveled to 10 foreign countries in the recent past. The report said that the IRS had filed tax liens against both individuals but large amounts of tax still were uncollected.

Currently, if a taxpayer has an outstanding tax debt but can’t be found, the IRS can alert Homeland Security officials to question the person on his way into the U.S. Typically, they will ask where the person is going and for how long, so the IRS can get in touch, but they can’t arrest a taxpayer. IRS Tax Liens are almost automatic.  The IRS can file a Notice of Federal Tax Lien after: 1. The IRS assesses the liability IRS, 2. They send you a Notice and Demand for Payment saying how much you owe and 3. You fail to fully pay within 10 days. A tax lien can be issued in error. Even where there is no mistake and the IRS lien is valid, occasionally the person might not actually owe the taxes and may just need to straighten out some paperwork.

Recently the bill, known as the Trade Facilitation and Trade Enforcement Act of 2015 (S. 1269), was approved by on May 13, 2015. It includes amendments to the tax code that would allow authorities to revoke or deny the passport of any US taxpayer who has unpaid taxes in excess of $50,000 or who have not obtained or won’t provide a Social Security number.

The concept is hardly new as we discussed above, similar proposals tying passports to tax liability have been kicked around the halls of Congress for several years:

• In 2012, Harry Reid (D-NV) proposed that passports should not be issued to taxpayers who owed the IRS more than $50,000.

• In 2014, Ron Wyden (D-OR) supported Moving Ahead for Progress in the 21st Century Act, that would have allowed your passport to be revoked if you owed the IRS more than $50,000 and the IRS had filed a notice of lien.

An advocacy group for U.S. expatriates, American Citizens Abroad, wrote a letter to congressional leaders to strongly oppose the inclusion of the passport revocation provision in the legislation.   It has been argued that this is an illegal infringement on a US citizen’s right to travel and is unconstitutional. Others fear that this provision could result in administrative nightmares and glitches that could hold up lines at airports and the Hill has expressed doubts that this bill will ever make it to President Obama’s desk.

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Original Post By:  Ronald Marini

Sources:

AccountingToday

Accountingweb

Forbes

Mr. Marini concentrates his practice in Representation before the IRS and All Other Tax Authorities, IRS Collections, Offers in Compromise, Installment Payment Plans, Appeals, Sales Tax Audits, International and Tax Law, Asset Protection and Estate Planning.

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