Owe Back taxes? No passport !

[papadad111]

Thought this was interesting. Not that any of us have big tax debt to the IRS but it's interesting how intertwined different agencies are becoming. IRS has a hand in healthcare and now potentially in global travel too !

"U.S. citizens who owe money to the tax man might soon be barred from flying out of the country — or even out of town.

Two separate federal government policies are converging to make traveling difficult for travelers in the unspecified future. Buried in December's Fixing America's Surface Transportation (FAST) Act is a provision that gives the IRS the right to have the State Department deny or revoke the passport of a taxpayer that has a delinquent federal tax bill of at least $50,000."

How back taxes may ground you—literally

IRS back taxes may mean really getting grounded

 

[Sunset]

I didn't read it, but from your summary, I think its a good idea.
If some person owes lots of taxes and leaves the country, they might not come back to pay them, plus why should they be allowed to go spend their cash instead of paying their bills ?

 

[Totoro]

"According to IRS data, there are at least 12 million taxpayers with delinquent accounts, with some of those cases referred for enforcement activity such as tax liens and seizures".

Restricting travel this way is equivalent to restricting movement. As in prisons and such.

This in effect also means that the IRS will be able to ground anyone they have a dispute with. Even if they are in the wrong.

I'm a European so not directly affected, but still find things like this disturbing. I've seen Schengen (free travel zone in EU) start, it is bliss compared to what was before.

So I hope enough safeguards are put in place.

 

[gauss]

I didn't read it, but from your summary, I think its a good idea.
If some person owes lots of taxes and leaves the country, they might not come back to pay them, plus why should they be allowed to go spend their cash instead of paying their bills ?

Would you still support the policy even if the $50,000 floor for enforcement is lowered a few years down the road. $10,000? $1,000? etc?

-gauss

 

[Htown Harry]

... why should they be allowed to go spend their cash instead of paying their bills ?

One reason would be because international travel it is how they earn the income needed to pay the taxes owed...

Around half of all international air travel is for business.
https://www.certify.com/2013-09-12-Business-travel-accounting-for-large-percentage-of-flights

 

[Senator]

Would you still support the policy even if the $50,000 floor for enforcement is lowered a few years down the road. $10,000? $1,000? etc?

Yes. If you have enough for travel, maybe you can pay taxes. Even if it is for business. Otherwise, get out of the business. You are likely doing a lot of other things that are not right.

One reason would be because international travel it is how they earn the income needed to pay the taxes owed...

That falls under the category, too bad, so sad. Here in MN, they take away your driver’s license of you fail to pay child support. Even if you need it for a job.

I owned a bar at one point, I got my liquor license suspended because I forgot to mail in ~$100 worth of quarterly MN Income tax withholding. It was later changed to an annual filing...

I just purchased a house from a lower-income family that had a $25K federal income tax lien on their home. The family lost, and I gained, possibly $35K+ in home equity because of the tax lien. On a $75K home.

Tax collection issues happen all the time. If you need to use a passport, learn to pay your taxes.

 

[pb4uski]

I don't have a problem with denying or revoking passports for people who don't pay taxes and owe over $50k..... there need to be adverse consequences of failing to pay taxes. If you don't pay your taxes then you should expect that there will be adverse consequences such as this until you have paid up.

I do concede that I have concerns that this could be abused in cases where there is a legitimate tax dispute on the amount due or people who pay their taxes but their accounts haven't been properly credited with their payments, but that is what judges are for.

 

[MichaelB]

This is more of a tax policy discussion than forum travel related, so the thread has been moved and hot topic enabled.

 

[mystang52]

I don't have a problem with denying or revoking passports for people who don't pay taxes and owe over $50k..... there need to be adverse consequences of failing to pay taxes. If you don't pay your taxes then you should expect that there will be adverse consequences such as this until you have paid up.

I do concede that I have concerns that this could be abused in cases where there is a legitimate tax dispute on the amount due or people who pay their taxes but their accounts haven't been properly credited with their payments, but that is what judges are for.

I agree. In theoretical principle, I have no problem with the stated guideline. If one owes the IRS a significant sum, restricting travel is - on its surface - a good enforcement tool.
But knowing the IRS, "owed" vs "allegedly owed" may become blurred. If there is a genuine dispute, will this policy still be invoked? And as others questioned, will that $50,000 threshold at some point be administratively reduced?

 

[NYEXPAT]

I do not see the point? Only 25% of Americans have a passport to begin with and if you are going to play "fast and loose" you should have a second or third passport anyway.

 

[Alan]

I do not see the point? Only 25% of Americans have a passport to begin with and if you are going to play "fast and loose" you should have a second or third passport anyway.

US citizens are legally required to leave and enter the US using a US passport, but since the US doesn't have exit controls, then as you correctly point out, if someone is leaving to avoid paying tax arrears they won't hesitate to break another law.

 

[Steevo]

Would you still support the policy even if the $50,000 floor for enforcement is lowered a few years down the road. $10,000? $1,000? etc?

-gauss

Why does the amount you have defaulted on make a difference?
If you have unpaid taxes, you should lose your passport, and have your wages attached unless an alternative repayment plan has been established with and approved by the IRS.
Cheating on or evading taxes is ILLEGAL.

 

[devans0]

I had a dispute over an equity sale of retirement funds. Paper was claimed missing on basis and I was audited with the IRS maintaining that I was gifted all of my stock in dispute. Taxes, interest and penalties were due for the entire amount.

Because of a flood, I no longer had my tax returns. I had to amend and refile my taxes. I ended getting a large write off. I would have been grounded on these rules. If I needed to go I front of a judge would take months if not years. This gives a government department too much power with no oversight. There is no question that this power will be abused in my mind, the only question is how long it will take.

 

[youbet]

This seems like a reasonable idea.

a provision that gives the IRS the right to have the State Department deny or revoke the passport of a taxpayer that has a delinquent federal tax bill of at least $50,000.

I like that it applies to large ($50k and up and up) of "delinquent" taxes and therefore the non-payer will be someone who has had the opportunity to secure representation, gone through his/her hearing and appeal process, and had an opportunity to bring in documentation originally missing or even new documentation.

I can't imagine this penalty applying to many. $50k is a lot of delinquent taxes and the normal appeal process would delay the official "delinquent" gavel from coming down for a substantial time. Frankly, I'd like to see those folks doing things like running profitable cash businesses for years and similar finally be shown a reason to pay. It's lonely here in Compliant-Land.

 

[Teacher Terry]

About 15 years ago I saw a very sad story on TV where a family was accused of not paying their taxes and had a home and small business. The IRS ended up taking all their assets, freezing their accounts so they had no money at all, they tried to get help from a lawyer, etc. After a few years of fighting this, couch surfing with friends/family the man couldn't take it and killed himself. It turns out in the end that they didn't owe any taxes at all and they got everything back from the IRS. Except the person's life of course. So yes i think this is a bad idea.

 

[6miths]

Seems like the IRS has a 'Take care of the nickels and dimes and the dollars will take care of themselves' philosophy. More likely, those with the dollars will take care of themselves. Just have the feeling that those with the Gulfstreams aren't really concerned about these measures.

 

[youbet]

About 15 years ago I saw a very sad story on TV where a family was accused of not paying their taxes and had a home and small business. The IRS ended up taking all their assets, freezing their accounts so they had no money at all, they tried to get help from a lawyer, etc. After a few years of fighting this, couch surfing with friends/family the man couldn't take it and killed himself. It turns out in the end that they didn't owe any taxes at all and they got everything back from the IRS. Except the person's life of course. So yes i think this is a bad idea.

I'd like to read that story. Googled and couldn't find it. Any further clues? I know this was a long time ago but maybe you can recall some further detail?

 

[NYEXPAT]

About 15 years ago I saw a very sad story on TV where a family was accused of not paying their taxes and had a home and small business. The IRS ended up taking all their assets, freezing their accounts so they had no money at all, they tried to get help from a lawyer, etc. After a few years of fighting this, couch surfing with friends/family the man couldn't take it and killed himself. It turns out in the end that they didn't owe any taxes at all and they got everything back from the IRS. Except the person's life of course. So yes i think this is a bad idea.

I have seen similar stories about forfeiture and most people find it is not worth it to fight the IRS even though a study a few years back (by the IRS) estimates that 30% of forfeitures are conducted illegally!

 

[youbet]

I have seen similar stories about forfeiture and most people find it is not worth it to fight the IRS even though a study a few years back (by the IRS) estimates that 30% of forfeitures are conducted illegally!

Are you sure that's accurate? I can't find a reference to "30% of forfeitures being conducted illegally" anywhere. I'll keep looking though.

 

[NYEXPAT]

https://www.techdirt.com/articles/20141214/11540529440/irs-drops-its-asset-forfeiture-case-against-owner-small-cash-only-restaurant.shtml

Here is an example from a fast search.

 

[NYEXPAT]

Are you sure that's accurate? I can't find a reference to "30% of forfeitures being conducted illegally" anywhere. I'll keep looking though.

Let me help you with that:
Forbes Welcome

 

[youbet]

Let me help you with that:
Forbes Welcome

Thanks NYEXPAT......

That was an interesting read. On the one hand, the IRS should be error free. On the other hand, it turns out that the "illegal" seizures were not seizures that should not have happened but seizures where there were paper work mistakes or administrative issues, such as whether the IRS chose the correct advertising prior to the auction, that were discovered in an postmortem audit.

I had been picturing IRS agents kicking in doors, barking German Shepherds and AK-47's spitting out their deadly wrath. But it looks like the "illegal" activity is clerical or administrative errors where the "victim" indeed was in violation of the tax code and persistently refused to pay but the IRS made paper work errors during the collection process. This wasn't quite as thrilling as picturing a couple huddled in their bed in the wee hours with IRS thugs pointing guns at them.......

The sale of the seized property was not properly advertised. (Section 6335(b))

The amount of the liability for which the seizure was made was not correct on the notice of seizure provided to the taxpayer. (Section 6335(a))

Proceeds resulting from the seizure of properties were not properly applied to the taxpayer’s account or seizure and sale expenses were not properly charged. (Sections 6341 and 6342(a))

The balance-due letter sent to the taxpayer after sale proceeds were applied to the taxpayer’s account did not show the correct remaining balance. (Section 6340(c))

The tax world is noting this. See IRS Doesn’t Comply with Legal Guidelines when Seizing Taxpayer Property. And taxpayers should be too. It doesn’t mean that the tax debts aren’t valid or that the IRS doesn’t have a legal right to collect.

But what it does suggest is that 30% of the time–hardly a rounding error–the IRS gets something wrong. And that should encourage taxpayers in this unfortunate position to verify everything, and where appropriate, to seek professional advice. Be careful out there.

I did appreciate the reminder Forbe's gave regarding the "targeting" of conservative groups done by the IRS. It does give me the creeps to imagine the executive branch using the IRS as a weapon to destroy political enemies!

After the targeting scandal, a key IRS official claimed the Fifth Amendment.

 

[Teacher Terry]

Youbet: that is all I remember. I saw it on TV.

 

[Sunset]

"According to IRS data, there are at least 12 million taxpayers with delinquent accounts, with some of those cases referred for enforcement activity such as tax liens and seizures".

Restricting travel this way is equivalent to restricting movement. As in prisons and such.

This in effect also means that the IRS will be able to ground anyone they have a dispute with. Even if they are in the wrong.

I'm a European so not directly affected, but still find things like this disturbing. I've seen Schengen (free travel zone in EU) start, it is bliss compared to what was before.

So I hope enough safeguards are put in place.

The person would be restricted to the USA, which is very very large and not like a prison, so I don't see it as a hardship.
Nobody is talking about locking up folks who are late paying their taxes.

 

[Koolau]

I would agree with most here that one needs to pay one's taxes and not doing so should have consequences. However, the necessity to prove one's innocence rather than the agency proving one's guilt does seem to tip the scales on this subject though that's arguable.

Then there is the recent agency admission of targeting certain groups. Google it if you missed it - it didn't get near the coverage that the original accusations received a year ago. (At the time, the accusations were "dismissed.") Imagine the power this provision provides to anyone willing to use it for other than its intend purpose. Also, see my tag line.