by | ARTICLES, BLOG, CONSTITUTION, FREEDOM, GOVERNMENT, IRS, TAXES
The State Department, in tandem with the IRS, has stepped up enforcement of an Obama-era law that blocks Americans with ‘seriously delinquent’ tax debt from receiving new passports — and will, at some point — be allowed to rescind existing passports of people who fall into that category.”
The roots of this law began back in 2012, when a report issued by the GAO suggested the possibility of tying tax collection to passport issuance, in an effort to collect revenue. Soon thereafter, Senator Harry Reid introduced a bill in Congress that did just that, with a threshold of $50,000 in delinquency. The bill had been attempted several times in Congress over the last few years before finally being passed in late 2015; it was quietly tucked into a highway-funding bill (HR22).
Though there are exceptions to the rule (emergency and humanitarian travel, for instance), valid criticisms of the rule were raised. For instance the law isn’t limited to criminal tax cases or even situations where the government fears you are fleeing a tax debt; your passport can now get revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien. Yet a $50,000 tax debt is easy to amass today and tax liens are pretty standard. The IRS files tax liens routinely when you owe taxes. It’s the IRS’ way of putting creditors on notice so the IRS eventually gets paid; the Joint Committee on Taxation estimated that the new law would raise about $400 million over the next decade.
A serious problem, however, looms for millions of U.S. citizens living abroad. Passports, obviously, are essential for travel, residency permits, banking, school, and work visas; yet, the IRS has documented trouble with getting mail properly to expats.
Furthermore, National Taxpayer Advocate Nina Olson, say the notices to debtors often come at the same time the State Department is notified of the taxpayer’s debt, in some cases leaving not enough time to resolve tax issues before passport problems occur.
None of that seems to matter to the IRS, which has reported that 220 people have turned over $11.5 million to repay their full debts as of late June, while 1,400 others had set up payment plans to reduce their debts. Essentially, more than 350,000 Americans face passport denial when applying or renewing, with little to no recourse for an agency plagued with problems.
by | BLOG, ELECTIONS, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
The State Department, in tandem with the IRS, will soon have the ability to “block Americans with ‘seriously delinquent’ tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category.” This new law will likely begin in January 2016.
The roots of this new law began back in 2012, a report issued by the GAO suggested the possibility of tying tax collection to passport issuance, in an effort to collect revenue. Soon thereafter, Senator Harry Reid introduced a bill in Congress that did just that, with a threshold of $50,000 in delinquency. The bill been attempted several times in Congress over the last few years.
Most recently, the new rule proposal is tucked into a highway-funding bill (HR22) that currently sits in committee and is likely to be voted on sometime in December.
Though there will be exceptions to the rule (emergency and humanitarian travel, for instance), valid criticisms of the rule were raised earlier this year in Forbes. For instance the proposal “isn’t limited to criminal tax cases or even situations where the government fears you are fleeing a tax debt. In fact, if the bill is passed you could have your passport revoked merely because you owe more than $50,000 and the IRS has filed a notice of lien.
A $50,000 tax debt is easy to amass today. In addition, tax liens are pretty standard. The IRS files tax liens routinely when you owe taxes. It’s the IRS way of putting creditors on notice so the IRS eventually gets paid. In that sense, the you-can’t-travel idea seems extreme. Some commentators noted that a far smaller sum of unpaid child support can trigger similar passport action. Others attack the proposal as potentially unconstitutional.”
The Joint Committee on Taxation has estimated that the new law would raise about $400 million over the next decade.
A serious problem, however, looms for millions of U.S. citizens living abroad. Passports, obviously, are essential for travel, residency permits, banking, school, and work visas; yet, the IRS has documented trouble with getting mail properly to ex-pats.
The Wall Street Journal mentioned noted that ” a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, ‘IRS data systems aren’t designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.’
The Tigta report said that ‘current IRS processes for addressing international mail issues are ineffective or nonexistent.’ In response, the IRS said that Tigta’s recommendations wouldn’t overcome the agency’s ‘budgetary, statutory, and operational constraints.’ ”
The implementation of this new law will be worthwhile to watch in the coming months, especially as it will likely affect those living abroad.
