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Don’t pack your bags just yet

Don’t pack your bags just yet; you may not be going anywhere.

Tax evasion is a crime, it is better to get the help of a qualified tax attorney to help you file your FBAR returnsThe Senate  bill 1813 may just be the reason why you as a tax payer that owes the IRS taxes might just not be in a hurry to pack up your bags. In case you are planning on going anywhere, don’t pack your bags just yet; you may not be going anywhere. If this bill goes through, you might want to consider your tax debt first.

If your tax debt amounts to $ 50,000 and above, you may as well say bye to your traveling rights.

This is because your passport may be revoked soon. As a tax payer, you may want to consider the Senate bill 1813  introduced by Senator Barbara Boxer (D-Los Angeles) in November and passed by Senate on a 74 – 22 vote on March 14th  2012. The Highway Bill, also known as MAP-21 (Moving Ahead for Progress in the 21st Century) is to “reauthorize Federal-aid highway and highway safety construction programs and for other purposes.”

Your concern as a US citizen should be in the “Other purposes” section of the bill. Part of this is an amendment written by Senate Majority Leader Harry Reid, seeking to prevent any American citizen from leaving the country based upon a determination by the Internal Revenue Service (IRS) that you owe the government back taxes. The amendment, under Section 40304 of the legislation provides for “Revocation or denial of passport in case of certain unpaid taxes.” This would authorize the State Department to revoke passports for anyone the IRS certifies as having “a delinquent tax debt in an amount in excess of $50,000. The responsibility to prove that you owe taxes is solely vested in IRS and not any court. All the IRS need to do is to prove this without following any due process. IRS can move to suspend or revoke your passport on pure suspicion of tax delinquency before you even have a trial. Nothing will stop an IRS agent from flagging you with a lien to stop travel, even if the lien turns out to be false. It is important to note that the bill does not allow for exceptions in the following cases; emergency, humanitarian situations, limited return travel to the U.S., tax debt is being repaid in a timely manner and in situations where collection efforts have been suspended.

This bill is a step away from becoming law.

There is a high possibility that this bill will become law despite the stiffer opposition it is expected to face from Republicans in the House of Representatives. The provision for passport provocation is not so conspicuous; it is sandwiched deep within the very important transportation bill. The importance of saving the Highway Trust Fund from becoming bankrupt seems to be a priority overshadowing your need to travel freely. The need for the government to raise more finances in light of the shrinking economy may be the driving force to this provision. According to Lesniewski, passport provision has a good chance of becoming law for one reason; money. This provision is expected to raise almost $750 million in the 10-year budget window period. According to Senator Barbara, thousands of businesses are at stake, and nearly three million jobs at stake. She notes that, “there are many people on both sides of the aisle in the Senate who want to get our bill … passed into law, and I am going to do everything I can to keep the pressure on the Republican House to do just that.”

What does this mean to a U.S citizen with a delinquent tax debt in the excess of $50,000?

It means that if the house passes the bill, which has already been passed by Senate, then the IRS will have the power to revoke your passports. Constitutional Attorney Angel Reyes notes that this provision takes away your right to enter or exit the country based upon a non-judicial IRS determination that you owe taxes. Many businesses will be affected and so is the economy.

To be able to survive this, those with delinquent tax debts should make an effort to clear their debts with the IRS to avoid falling prey to this part of the bill; that is if it becomes law. Those with foreign bank accounts should report them and pay their taxes promptly to avoid this trap.

By Anthony N. Verni

About Anthony Verni

Anthony N. Verni is a Tax Attorney and Certified Public Accountant with over 20 years’ experience practicing before the Internal Revenue Service.Mr. Verni’s practice is focused on representing Expatriate and other U.S Taxpayers who have criminal and civil tax issues related to offshore tax evasion, money laundering, failure to file income tax returns, failure to report offshore income, failure to file FBAR reports and other tax related compliance and reporting concerns. Mr. Verni also represents individuals and businesses in connection with tax controversies involving income, estate and gift and employment taxes.
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