Study Suggests Feds Could Recoup Billions In Unpaid Taxes By Withholding Passports

[Thanyaburi Mac]

Good idea!! Every little bit counts. We've seen on TV several instances of AmCits going to the Embassy to renew their passports or do some administrative thing, and having their passport be kept for non-payment of U.S. child support. Or even if paid, the paperwork hadn't kept up with County to State to State Department hit lists. This could be just another such deal.

Mac

http://www.foxnews.com/politics/2011/04/12/study-suggests-feds-recoup-billions-unpaid-taxes-withholding-passports/

U.S. Senate

Study Suggests Feds Could Recoup Billions in Unpaid Taxes by Withholding Passports

Published April 12, 2011 | FoxNews.com

Owe thousands in back taxes and need to get out of the country? No problem. Under current law, the State Department can't withhold a passport over unpaid taxes.

But that could change, if lawmakers decide to run with the findings of a new government report suggests Uncle Sam could recoup billions by blocking delinquent Americans from getting passports until they settle their debts to the IRS.

The Government Accountability Office, at the request of Congress, released a study Monday examining how the government could leverage the passport process to recover unpaid taxes. The office found that in fiscal 2008, Americans who received passports owed a collective $5.8 billion to the IRS. The debt of the internationally traveling public, though, is likely far larger, considering that estimate only factored in a year's worth of recipients.

The GAO report projected that linking passports and tax obligations could lead to a windfall for the IRS, if Congress opts to draft legislation making that possible.

"The federal government has a vital interest in efficiently and effectively collecting the billions of dollars of taxes owed under current law," the report said. "Such legislation could have the potential to help generate substantial collections of known unpaid federal taxes and increase tax compliance for tens of millions of Americans holding passports."

It's not clear whether Congress wants to go down that road. The study was apparently conducted at the request of Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa. Representatives for the senators did not return requests for comment.

The GAO said that if Congress wants to extract tax debt with the help of the State Department, it would have to authorize State to deny passports on that criteria and authorize the IRS to share its tax data. The GAO also suggested determining whether some individuals should be exempted for "national security purposes" and setting a threshold for when a tax debt would be high enough to trigger the denial of a passport.

After all, plenty of travelers likely owe a modest amount of back taxes without even realizing it -- the GAO report also showed that only a small percentage of those who received passports in 2008 were delinquent.

The report suggested privacy issues would have to be dealt with if Congress pursues the change.

But the office pointed out that U.S. law already allows the State Department to deny passports for other reasons -- ranging from an applicant owing more than $2,500 in child support to having an outstanding felony warrant.

The GAO report examined a handful of severe cases where individuals received passports despite owing money to the U.S. government. In one case, an individual identified as a "gambler" owed nearly $47 million, despite filing tax returns claiming no outstanding balance with the IRS.

Another individual owed $40 million and did not file a personal income tax return for four years.

"IRS officials stated that screening passport applicants for federal tax debts would likely improve tax collections," the GAO report said.

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[NanLaew]

Land of the free, home of the slave

Having said that, the upshot is that the few filthy rich punters owing millions will not be harassed or penalized. However, life will become hell for thousands of hard-working proles who may have made tax miscalculations or small errors of judgment and owe only a few hundred bucks.

Edited April 13, 2011 by NanLaew

[on-on]

Note this tactic in comparison to the total sucking sound where it concerns the tax practices of GE, Google and most major American companies. Quick, get the expats. Meanwhile, sure, here's your 2bn tax rebate, GE, good accounting work on those transfer payments and offshore schemes! They could recoup 6bn by simply going after a single major American company.

Edited April 15, 2011 by on-on

[Schooner]

"They could recoup 6bn by simply going after a single major American company"

Excellent point and while were at it how about hiring some compitent people to man the SEC and get a grip on the stock market which has become a casino.

[happyrobert]

"The office found that in fiscal 2008, Americans who received passports owed a collective $5.8 billion to the IRS."

Hmmm, about what they spent for three days in Iraq back at the height of that near decade war. That'll go far.

Maybe the lawmakers that proposed this idea trained in Thailand. Considering the normal efficiency of the Ameriacn bureaucracy, it would probably cost more than 5.8 billion to implement and operate the program.

[zzaa09]

The IRS isn't government......never has been and it isn't today.

[PattayaParent]

Sounds like a good idea to me.

And not just refuse them a new passport, put them on a homeward bound 'plane in handcuffs with feds waiting at the othe end.

[Tywais]

Moved to Business & Banking

[jdinasia]

Land of the free, home of the slave

Having said that, the upshot is that the few filthy rich punters owing millions will not be harassed or penalized. However, life will become hell for thousands of hard-working proles who may have made tax miscalculations or small errors of judgment and owe only a few hundred bucks.

From the OP

The GAO said that if Congress wants to extract tax debt with the help of the State Department, it would have to authorize State to deny passports on that criteria and authorize the IRS to share its tax data. The GAO also suggested determining whether some individuals should be exempted for "national security purposes" and setting a threshold for when a tax debt would be high enough to trigger the denial of a passport.

[Heng]

One of the few cost effective, easy to implement ideas our gov't has come up with. That in itself suggests it probably won't come to pass until they waste at least a few hundred $ million to study it.

[jdinasia]

One of the few cost effective, easy to implement ideas our gov't has come up with. That in itself suggests it probably won't come to pass until they waste at least a few hundred $ million to study it.

I concur. I have no problem with the government trying to collect from tax-cheats at all. Filing annually on rental income etc is a pain in the ass, but I still do it.

[Ulysses G.]

Sounds like a good idea to me.

And not just refuse them a new passport, put them on a homeward bound 'plane in handcuffs with feds waiting at the other end.

That would end up costing more than most of them would owe and that is before they sued the government.

[TheFishman1]

What will they think of next to get money?Bad deal one thing has nothing to do with the other thing just my 2 cents

[PattayaParent]

Sounds like a good idea to me.

And not just refuse them a new passport, put them on a homeward bound 'plane in handcuffs with feds waiting at the other end.

That would end up costing more than most of them would owe and that is before they sued the government.

As the OP said they do it with child support frauds, so what's worse? defrauding your ex? or defrauding the federal government?

[chops]

Give up your citizenship. It's an option I will be exploring.

[happyrobert]

Give up your citizenship. It's an option I will be exploring.

Good luck. Keep me updated. Next to impossible. You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship. You are property to them, nothing more.

[mstribling]

Guess I should start paying then. Or just go off the grid.

[jdinasia]

Give up your citizenship. It's an option I will be exploring.

Good luck. Keep me updated. Next to impossible. You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship. You are property to them, nothing more.

Huh?

AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy. (Which would probably require you to hand over your passport at the same time, as it is property of the US gov't)

[happyrobert]

Give up your citizenship. It's an option I will be exploring.

Good luck. Keep me updated. Next to impossible. You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship. You are property to them, nothing more.

Huh?

AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy. (Which would probably require you to hand over your passport at the same time, as it is property of the US gov't)

I didn't notice where he said he had dual citizenship.... MRKIA

[jdinasia]

Give up your citizenship. It's an option I will be exploring.

Good luck. Keep me updated. Next to impossible. You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship. You are property to them, nothing more.

Huh?

AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy. (Which would probably require you to hand over your passport at the same time, as it is property of the US gov't)

I didn't notice where he said he had dual citizenship.... MRKIA

Re-read your first post and my response

You say : You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship.

I say : AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy.

My points are .. they 1. won't let you become stateless and 2. under the circumstances you list will let you.

edit ---- it appears that they MIGHT let you become stateless!

http://travel.state.gov/law/citizenship/citizenship_776.html

Edited April 15, 2011 by jdinasia

[happyrobert]

Good luck. Keep me updated. Next to impossible. You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship. You are property to them, nothing more.

Huh?

AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy. (Which would probably require you to hand over your passport at the same time, as it is property of the US gov't)

I didn't notice where he said he had dual citizenship.... MRKIA

Re-read your first post and my response

You say : You must first obtain the permission of the U.S. government (and they never give it) after you have received another country's offer of citizenship.

I say : AFAIK the US will not let you become stateless, but if you have dual citizenship (again AFAIK) all it takes is renouncing your citizenship at an embassy.

My points are .. they 1. won't let you become stateless and 2. under the circumstances you list will let you.

edit ---- it appears that they MIGHT let you become stateless!

http://travel.state....enship_776.html

There's hope!

Now to buy a ticket to Somalia.

I hear 89% of its citizens live on the beach and that 23% are millionaires.

[CWMcMurray]

I think that the below clause to be even more interesting... it appears that even if you did renounce your citizenship, they could still come after you not paying your taxes...

TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION Also, persons who wish to renounce U.S. citizenship should also be aware that the fact that a person has renounced U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship will not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.

http://travel.state.gov/law/citizenship/citizenship_776.html

[jdinasia]

I think that the below clause to be even more interesting... it appears that even if you did renounce your citizenship, they could still come after you not paying your taxes...

TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION Also, persons who wish to renounce U.S. citizenship should also be aware that the fact that a person has renounced U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship will not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.

http://travel.state....enship_776.html

Yeppers, back taxes would still be an issue (for some) but never again any foreign income tax for those in the higher tax brackets. I don't know where that would leave me as a property owner etc in the US, but frankly it doesn't matter. I'll not be renouncing citizenship and throwing away the potential future benefits (most particularly the freedom to travel.)

[flying]

I think that the below clause to be even more interesting... it appears that even if you did renounce your citizenship, they could still come after you not paying your taxes...

Yeppers, back taxes would still be an issue (for some) but never again any foreign income tax for those in the higher tax brackets. I don't know where that would leave me as a property owner etc in the US, but frankly it doesn't matter. I'll not be renouncing citizenship and throwing away the potential future benefits (most particularly the freedom to travel.)

It is not just back taxes that you need to pay before leaving...

There is also an exit tax if

* you have a net worth of US$ 2 million or more;

* you have an average net U.S. income tax liability of greater than US$ 139,000 (thereafter indexed for inflation; $145,000 for people expatriating in 2009) for the five year period prior to expatriation; or

* you fail to certify that you have complied with all U.S. federal tax obligations for the preceding five years.

http://www.isla-offshore.com/second-passport/usa-expats-exit-tax/

It is the Hotel California.....

You can check out anytime you like but you may never leave

Edited April 15, 2011 by flying

[exbelg]

US citizens pay taxes because the federal reserve , which is not federal at all, but a private bank, prints and loans money to the US governement with intrest.. right ?

and so enslaves and forces working people to fill the big hole of which is made by paying illegal taxes..

did Kennedy not presumly got killed for wanted to change that unfair system ?