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FINANCE

NOTICE TO
AMERICAN TRAVELERS
by Michael Wiener, E.A.
C ongress passed FATCA a few years back. It was
aimed at reaching money of tax evaders hidden delinquent tax debt in an amount in excess of $50,000. Administrative details
are scant. It could mean no new passport and no renewal. It could even mean

offshore, as a result it is nearly impossible for U.S. the State Department will rescind existing passports. The State Department

persons to hold or open bank or brokerage accounts outside will evidently act when the IRS tells them, and that upsets some people. We

of the U.S. That is, for a tax policy objective, the freedom think of passports when traveling internationally, but some people may find

enjoyed by U.S. persons to hold their liquid assets wherever that passports are required for domestic travel in 2016. That could make the

they want in the world has been substantially curtailed. IRS hold even more serious. The list of affected taxpayers will be compiled

The construction of Gulag America under the guise of tax by the IRS. The IRS will use a threshold of $50,000 of unpaid federal taxes.

policy continues apace with the But this $50,000 figure includes penalties and interest. And as everyone

passage and signing of the Fixing knows, interest and penalties can add up fast. Notably, if you are contesting

America’s Surface Transportation a proposed tax bill administratively with the IRS or in court, that should not

(FAST) Act in the last few days. count. That is not yet a tax debt. There is also an administrative exception,

The Act adds new Section 7345 allowing the State Department to issue a passport in an emergency or for

to the Internal Revenue Code. humanitarian reasons. But how that will work isn’t clear, nor is the amount

This provision provides that if of time it will take to get special dispensation. You would still be able to

the IRS Commissioner certifies travel if your tax debt is being paid in a timely manner, as under a signed

that a taxpayer is delinquent in installment agreement.The rules are not limited to criminal tax cases or where

his her federal taxes to the tune the government thinks you are fleeing a tax debt. In fact, you could have your

of $50,000 or more, the Secretary passport revoked merely because you owe more than $50,000 and the IRS

of State can take action to deny, has filed a notice of lien. A $50,000 tax debt including interest and penalties

revoke or limit the taxpayer’s passport. That is, persons with is common, and the IRS files tax liens routinely. It’s the IRS way of putting

delinquent taxes may now be barred from leaving the U.S.The creditors on notice. The IRS can file a Notice of Federal Tax Lien after the

U.S. has enforced its taxes for over one hundred years with IRS assesses the liability, sends a Notice and Demand for Payment, and you

civil and criminal enforcement mechanisms. Apparently, that fail to pay in full within 10 days.

enforcement arsenal is no longer sufficient, and U.S. citizens The right to travel has been recognized as fundamental, both between

in financial straits will now lose their travel “privileges.” states and internationally. And although some restrictions have been upheld, it

is not clear that this measure will pass the constitutional test if it is challenged.

IRS POWER TO REVOKE Speaking of challenge, it is not off-topic to mention FATCA, the Foreign
PASSPORTS SIGNED INTO LAW Account Tax Compliance Act. FATCA penalizes foreign banks that don’t
hand over American account holders. There are approximately eight million
The passport provision is now official, as President Obama Americans living overseas, many of whom are still reeling from FATCA
signed the five-year infrastructure spending Bill. It adds a new compliance problems.
section 7345 to the Internal Revenue Code. It is part of H.R.

22 – Fixing America’s Surface Transportation Act, the “FAST

Act.” Why are passports covered in the tax code, you might If you should have a topic that you would like me to

ask? The title of the new section is “Revocation or Denial of discuss or if you should have a question, please feel free to call

Passport in Case of Certain Tax Delinquencies.”The idea goes 239.403.4410 or e-mail me at

back to 2012, when the Government Accountability Office mike@cctaxandaccounting.com.

reported on the potential for using the issuance of passports

to collect taxes. It was controversial then, but this time sailed An enrolled agent, licensed by the US Department

through, slipped into the massive highway funding bill, of the Treasury to represent taxpayers before the IRS

passed here. The section on passports begins on page 1,113. for audits, collections and appeals. To attain the enrolled agent

The joint explanatory statement is here, beginning on page 38. designation, candidates must demonstrate expertise in taxation, fulfill

The law says the State Department can revoke, deny or limit continuing education credits and adhere to a stringent code of ethics.

passports for anyone the IRS certifies as having a seriously

74 Life in Naples | February 2016