Revocation/Denial of Passport For Americans With Seriously Delinquent Tax Debt

[MyFriend You]

I thought this deserves posting, read & heed.

The IRS has now posted a notice on its website indicating that it has began sending certifications of unpaid tax debt to the State Department in February 2018. Americans with seriously delinquent tax debt (totaling more than $51,000 (including interest and penalties) , per IRC § 7345 will be certified as such  to the State Department for action. The State Department reportedly will not issue passports to to individuals after receipt of certification from the IRS.

 

https://diplopundit.net/2018/07/11/officially-on-revocation-denial-of-passport-for-americans-with-seriously-delinquent-tax-debt/

[ubonjoe]

Not directly visa related. Moved to here.

I read about that somewhere before.

Same for delinquent child support payments. A few people have had a unpleasant surprise when they went to get a new passport.

[ubonjoe]

A off topic political comment has been removed.

[caughtintheact]

It applies to Americans who owe more than US$51,000 in back taxes.  The FAST Act was passed in 2015. The website offers remedies for those in arrears. In addition,

A passport won’t be at risk under this program for any taxpayer: 

• Who is in bankruptcy
• Who is identified by the IRS as a victim of tax-related identity theft
• Whose account the IRS has determined is currently not collectible due to hardship
• Who is located within a federally declared disaster area
• Who has a request pending with the IRS for an installment agreement
• Who has a pending offer in compromise with the IRS

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

• In general, taxpayers behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS. Frequently, taxpayers qualify for one of several relief programs, including the following:
• Taxpayers can request a payment agreement with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement for up to 72 months.

Some financially distressed taxpayers may qualify for an offer in compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.

IRS.gov has other tips for taxpayers to catch up on their filing and tax obligations and more information about the revocation or denial of passports because of unpaid taxes.

https://www.irs.gov/newsroom/irs-urges-travelers-requiring-passports-to-pay-their-back-taxes-or-enter-into-payment-agreements-people-owing-51000-or-more-covered

[lionsincity]

Some of these western countries (usa, australia) have become oppressive nightmares.

[topt]

12 minutes ago, lionsincity said:

Some of these western countries (usa, australia) have become oppressive nightmares.

Are you suggesting then that it is ok not to pay taxes which you owe? How is this oppressive.

If you have paid your taxes no issue.............$51k is not a small amount of taxes for most people.

[Tom89]

5 minutes ago, topt said:

Are you suggesting then that it is ok not to pay taxes which you owe? How is this oppressive.

If you have paid your taxes no issue.............$51k is not a small amount of taxes for most people.

It's oppressive to be made to pay taxes to a country where one no longer lives nor earns income. Only one other country in the world taxes its people based on citizenship rather than residency, Eritrea.

[GinBoy2]

Are we supposed to feel some sympathy for this?

If you owe $51K in taxes, thats a helluva lot of unpaid tax, it pays for a lot of those services people bemoan we don't spend enough money on.

I baffles me the double standards of some on here. Berate the US for this policy, then berate the likes of Amazon, Starbucks because they exploit the tax regime that their elected governments enacted, because they don't pay enough tax.

Pick your battles boys & girls

[malt25]

6 minutes ago, Tom89 said:

It's oppressive to be made to pay taxes to a country where one no longer lives nor earns income. Only one other country in the world taxes its people based on citizenship rather than residency, Eritrea.

I must be missing something here. Wouldn't the unpaid tax have been generated while still residing in your country of citizenship ? If so, isn't one morally & legally obliged to pay ? If tax generated while residing away from "home country", then different situation.

[moe666]

42 minutes ago, lionsincity said:

Some of these western countries (usa, australia) have become oppressive nightmares.

If they were a nightmare they would do as the ancient Romans did, declare the rich person an enemy of the state execute them and then confiscate their fortune also kill,imprison, or exile family members

[caughtintheact]

U.S. citizens working abroad get a tax exclusion for the first $100K+ per year for money earned abroad.  https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

I would also hesitate to use the term "oppressive" in the blanket sense because many Americans who work abroad return to the USA where they get whatever benefits those taxes provide. Perhaps "oppressive" could be applied selectively only to those Americans permanently living abroad who have no income in their home country but are taxed on money they earn abroad. 

[NoshowJones]

1 hour ago, Tom89 said:

It's oppressive to be made to pay taxes to a country where one no longer lives nor earns income. Only one other country in the world taxes its people based on citizenship rather than residency, Eritrea.

If people are getting made to pay taxes that are unjust and unfair, then it is oppressive, no matter

what country it is.

[BuaBS]

1 hour ago, malt25 said:

I must be missing something here. Wouldn't the unpaid tax have been generated while still residing in your country of citizenship ? If so, isn't one morally & legally obliged to pay ? If tax generated while residing away from "home country", then different situation.

If so , isn't one morally & legally obliged to pay ?

 

Morally not .

[Thaidream]

This was an amendment in 2015 attached to a bill totally unrelated to taxation and the IRS. While people have to pay taxes- denying a person's right to travel  is unconstitutional and eventually someone will file a court action.

 

My argument with this issue is the way the law was added to the United States Code. It was done surreptitiously in the final days of a bill involving funding the US Transportation system. There was no vetting of this addition to the US Code involving taxes and people had no way of even knowing it was a part of this bill  and could not comment one way or the other.  If the House and Senate wanted to make this an issue, they should have been upfront - rather than hiding it in the bowels of a 1000 page Transportation Bill

 

Actually $51,000 is not much when one figures the amount of penalties and interest that can add up.  The IRS code is 75,000 pages and most people have no idea how to do their taxes correctly.  A large tax bill can accumulate as a matter of errors committed over several years until the IRS one day sends a bill requesting back taxes.

 

The IRS system is onerous and time consuming-you can't communicate by email or any electronic means- everything is either by phone or  mail.  The appeal process takes years and if you lose all the penalties and interest  add up.  Most people eventually give up and enter into an installment agreement if the amount is large or just pay it off. You can take the IRS to court  (I have done it- the research on the law took me 6 month) but expect to lose -90% normally do lose.  This process takes a few more years  and again interest and penalties  continue.  By the time one finishes the appeal and court process -4 years may go by and the penalties and interest  normally cause the initial debt to double.  Remember, this  happens as a result of an error in one's taxes not any intent to avoid payment or fraud.

 

My little error of $1000 took me almost 4 years to solve and I ended up paying over $2000.

 

Needless to say I am no fan of the US Tax Code or the IRS and I find it unconscionable that the American Government would withhold a person's passport- obviate their right to travel when this same Government refuses to reform its outdated  and sometimes oppressive Tax regime.

[Tom89]

2 hours ago, caughtintheact said:

U.S. citizens working abroad get a tax exclusion for the first $100K+ per year for money earned abroad.  https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

I would also hesitate to use the term "oppressive" in the blanket sense because many Americans who work abroad return to the USA where they get whatever benefits those taxes provide. Perhaps "oppressive" could be applied selectively only to those Americans permanently living abroad who have no income in their home country but are taxed on money they earn abroad. 

Why only the first 100 K? Why not all of it, if the money wasn't earned in the US? Plus there's the fact that when overseas the applicable tax laws get so complicated, that every year you need to hire a CPA or Tax lawyer who specializes in international taxation. That gets expensive.

[ubonjoe]

Some off topic posts meant to deflect the topic and replies to them have been removed.

[caughtintheact]

19 minutes ago, Tom89 said:

Why only the first 100 K? Why not all of it, if the money wasn't earned in the US? Plus there's the fact that when overseas the applicable tax laws get so complicated, that every year you need to hire a CPA or Tax lawyer who specializes in international taxation. That gets expensive.

 

It is only the first 100K+ because that is what the IRS says it is.  See https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion. 

No disagreement on the complications. So I suggest that all concerned contact their elected representatives in Congress and ask for a change to the rules. 

[Tom89]

7 minutes ago, caughtintheact said:

It is only the first 100K+ because that is what the IRS says it is.  See https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion. 

No disagreement on the complications. So I suggest that all concerned contact their elected representatives in Congress and ask for a change to the rules. 

Ok, I misunderstood you. I thought you were implying 100K is enough of a deduction.

 

The Republicans Overseas and Americans Abroad are already working on this issue. Perhaps get in touch with one of them and see how you can help.

[caughtintheact]

50 minutes ago, Thaidream said:

This was an amendment in 2015 attached to a bill totally unrelated to taxation and the IRS. While people have to pay taxes- denying a person's right to travel  is unconstitutional and eventually someone will file a court action.

 

 

1

While I agree with a lot of your points, especially the complexity of the tax code, which, we have been told is simplified for most by the Tax Reduction and Jobs Act of 2017 https://www.congress.gov/bill/115th-congress/house-bill/1.

By early 2019 we should know  how simplified the taxes for individuals have become. .

I do not think that freedom to travel abroad is covered in the constitution, because if that were the case, no one would need a passport or a visa. Try going to a country that asks to see a passport,. Are there any countries that do not require a passport for non-citizens? See also https://www.americanbar.org/content/dam/aba/publications/insights_law_society/LG_RighttoTravel_quoteshandout.authcheckdam.pdf

[caughtintheact]

21 minutes ago, Tom89 said:

 

 

The Republicans Overseas and Americans Abroad are already working on this issue. Perhaps get in touch with one of them and see how you can help. 

 

Thanks, I have been involved for many years.

[Jaybott]

4 hours ago, lionsincity said:

Some of these western countries (usa, australia) have become oppressive nightmares.

You can always renounce your citizenship of your opressive country then you'll never have to pay taxes again.

[Thaidream]

Freedom of movement is central to the rights of a citizen of any country. To enable such a right means a Passport and possibly a Visa is essential.  For a country like the US to restrict movement by witholding a Passport for alleged payment of taxes is tantamount to a violation of the US Constitution and the Universal Declaration of rights.

 

A person has a right to due process- just because the Us Government says a person owes $51000 in taxes doesn't mean it is correct. The taxpayer has a right to challenge and present evidence.  The way the law is written- it appears that the mere request of payment of $51,000 allows the state  Department to deny a Passport.  In my opinion-a court would invalidate the law, but  it is going to probably have to go to the Us Supreme Court.

 

Congress attaching this amendment to a Transportation  Authorization Bill and causing this conundrum is a perfect example of how easily one can lose a right  without the electorate even being able to provide an opinion on what is happening. Most Americans do not even realize this is happening and it smacks directly at our Constitutional  rights.

The interesting thing is that this bill was passed by a Democratic Congress and sponsored by a Democratic senator.

[Suradit69]

4 hours ago, Tom89 said:

It's oppressive to be made to pay taxes to a country where one no longer lives nor earns income. Only one other country in the world taxes its people based on citizenship rather than residency, Eritrea.

When I was working outside the US I used the Foreign Earned Income Exclusion so I didn't have to pay taxes on income earned outside the US. Now I only have to pay taxes on some of my investment income, Social Security and pension, all of which are generated in the US.

 

Not a big fan of taxes, but I don't consider that to be oppressive.

 

If someone owes more that $51,000 in taxes he either is earning a helluva lot more than the income exclusion or he owed the money while in the US and then took off.

[Thaidream]

8 minutes ago, Jaybott said:

You can always renounce your citizenship of your opressive country then you'll never have to pay taxes again.

Why should a citizen have to renounce their citizenship to get justice?    The  US Tax Code of 75,000 pages is a myriad of laws open to interpretation.  Most Americans cannot even file their own taxes- because the law is so complicated-  Passing another law that penalizes an American by revoking or not slowing a Passport is a denial of due process.

There are literally millions of people who file their taxes in good faith and then years later get a bill indicating they made an error and that error is compounded for 3-4 years because the IRS does not notify them timely that an error is made.

The system is broken- it needs to be fixed. Just like the Immigration issue- the US Congress is refusing to do its job and reform the Internal Revenue Service.

[Thaidream]

4 minutes ago, Suradit69 said:

 

If someone owes more that $51,000 in taxes he either is earning a helluva lot more than the income exclusion or he owed the money while in the US and then took off

You can't take off- the IRS will eventually find you and you will then owe a larger amount of money.  There are people who have large salaries- they file taxes- they make errors- they claim credits or deductions in good faith- then years later the IRS denies them-  The tax code is too complicated for the averge person and the interest and penalties are huge.  Denying a person a Passport or revoking it because of unpaid taxes is a denial of due process- unless the taxpayer has  been allowed to use the appeal process and the Tax Courts to come to a final disposition.

[caughtintheact]

16 minutes ago, Thaidream said:

Freedom of movement is central to the rights of a citizen of any country. To enable such a right means a Passport and possibly a Visa is essential.  For a country like the US to restrict movement by witholding a Passport for alleged payment of taxes is tantamount to a violation of the US Constitution and the Universal Declaration of rights.

 

 

 

 

2

But don't you only need a passport if you travel to another country?  If you do not have one you cannot legally enter another country. Thus the requirement to hold a passport and in many countries to get a visa is a restriction on any freedom to travel outside your own country.  The constitutional right to travel is within one's own country.

[GalaxyMan]

4 hours ago, Tom89 said:

It's oppressive to be made to pay taxes to a country where one no longer lives nor earns income. Only one other country in the world taxes its people based on citizenship rather than residency, Eritrea.

That is incorrect. Both Holland and Portugal tax word-wide earnings...if they know about them. I say this from personal experience.

[Thaidream]

7 minutes ago, caughtintheact said:

But don't you only need a passport if you travel to another country?  If you do not have one you cannot legally enter another country. Thus the requirement to hold a passport and in many countries to get a visa is a restriction on any freedom to travel outside your own country.  The constitutional right to travel is within one's own country.

When the Us Constitution was written- people did not normally travel internationally- but in today's World it is a standard and normal thing.  It is the concept that is important- do people have a right to travel?  Travel means anywhere- domestic and international.  People have a right to due process. Simply because the IRS says you owe $51,000 does not make it so. A Taxpayer has the right of appeal and then court. Then they have the right to obtain an installment agreement with the IRS if they lose the appeal.  There is no need to restrict a person's travel rights.  It is oppressive. 

[jenny2017]

5 hours ago, lionsincity said:

Some of these western countries (usa, australia) have become oppressive nightmares.

What? The revenue department in Germany was chasing a guy who had to pay 2 Euro cents in tax. The stamp on the envelope was already 20 times more and paid by? Taxpayers.

 

  

[Wake Up]

If you owe more than $51,000 USA dollars in back taxes you should not be traveling the world IMO. I have paid my taxes and don’t hold a grudge against those that have not, but why should the USA government issue a passport for traveling to any citizen that has failed to pay his/her taxes?