9 ms·
Thousands of Americans Will Be Denied a Passport Because of Unpaid Taxes
- mankash666 8y agoI've had 2 instances where the IRS erroneously concluded that I owe them large tax bills. It took a few months of back and forth paperwork and phone calls to resolve, and have the IRS note on paper that I owe them nothing. With this law, an erroneous IRS decision can limit passport issuance and international travel. Three letter agencies are probably salivating at the prospect of 'errors' in possible suspects. This just unjustly empowers the government.
- duxup 8y agoI've had a couple run ins with the IRS as well where they thought I retired (nope) or did something I didn't do. It was pretty easy to resolve by paper for me, couple letters back and forth, but yeah it takes a while. Fortunately the IRS was good about it all. I wonder though if they're still investigating (sending me letters and I am responding) if it counts as owing them as far as this law goes? From what I remember from he letters provided by the IRS, if I'm responding with legit responses (I sent them the not correct paperwork a few times and they were still ok with that) they consider the matter in one phase, but if I'm not it goes to another phase. It would make sense (hopefully the law does) that provided I'm responding and the IRS is cool with my responses that I'm not subject to the law.... but if I'm not responding then maybe the law takes effect?
- refurb 8y agoThat’s what I’ve heard as well. Continue to engage the ITS and they are pretty reasonable and it takes time for them to enact any penalities. Ignore them? They drop the hammer pretty quickly.
- ta1234567890 8y agoI've had some close encounters with both the BOE (California's tax agency) and the IRS. Both operated pretty similarly, basically assuming we owed taxes unless we could prove otherwise (which is technically illegal since they have the burden of proof initially). They accused us with no proof, to intimidate us into handing over documents which they then used to build their case against us. Lawyers and accountants only offered to "negotiate" installments as the only help they could provide (and charging $$$$). In the end we won both times by researching the law, past cases, internal procedures, filing FOIA requests, gathering evidence and responding accordingly. In one instance they were being super unreasonable and unresponsive until we filed a request to go to court, at which point they became much more amicable and willing to "solve" our case. INAL, but if I had to deal with this stuff from the beginning again, knowing what I know now, I would not hand over any documents until it gets to the point where they either drop the case or make a tax assessment that allows me to request to go to court. At that point they don't have anything, I have all the documents and I know I've done nothing wrong. It's a stressful strategy to execute (nobody wants to have a tax agency going after them), but probably the cleanest.
- nradov 8y agoPassport denials don't occur immediately. The law provides for a grace period exactly because of situations like yours. I had the same thing happen once due to a clerical error by my employer's new payroll service. The IRS was actually quite helpful, and immediately put a hold on any penalties or extra taxes when I called and explained what happened.
- throwaway2016a 8y agoAnecdotally, the two times I have had this happen it went... 1. Me, calls IRS: "Hey, this is wrong because ..." 2. IRS: "Ok, fill out this form and send it in" 3. Me: Fills out form and sends it in 4. IRS: Provides me a document saying I am all set Probably about 3-4 weeks all said and done. I was actually impressed with how painless it was and how friendly the people were. An audit is a different story.
- TheCoelacanth 8y agoIt seems like you would have to go far beyond that stage without settling the tax bill before you would be at risk of having a passport application denied. > To be at risk of passport denial, a taxpayer must typically be subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. > Taxpayers typically aren’t subject to passport restrictions if they’re contesting an assessment administratively or in court, or if they have pending or current installment-payment agreements or offers-in-compromise with the IRS.
- git_rancher 8y agoThis makes the whole US a debtors prison of sorts. Not sure if this is a useful way to think about it though.
- V-2 8y agoTechnically the US doesn't prevent you from leaving the country for not having an American passport - it's other countries that are likely not to let you in.
- fooker 8y agoThe airline is unlikely to let you board, so there's that.
- V-2 8y agoBut that's between you and this private company :) Plus, I think at least part of the reason why airlines would be reluctant to board you is exactly that - knowing that the destination country wouldn't be happy with them dropping you at their doorstep with no passport in hand. What would they care otherwise?
- smelendez 8y agoThey will generally face big fines if they fly someone somewhere they can't get admitted to.
- deleted 8y ago[deleted]
- fyfy18 8y agoThis is exactly it - the airline is responsible for returning you home if you are denied entry to a country. My wife used to work as an air stewardess, and one of her longer flights was a 16 hour non-stop flight from Dubai to Brazil. This involved a 3 day layover, and on the inbound flight she saw some (rather tired) passengers who had been on the outbound flight. Apparently they were denied entry, however it was too late for them to go back on the same aircraft, so they had to wait in the airport (airside) for the next flight.
- godzillabrennus 8y agoSeems like it only further hinders people from paying back debt. Stupid.
- freehunter 8y agoI'm not sure I see how. Seems like a great incentive, actually. Your passport is about to expire, but you're not going to get a new one unless you settle your debts. I doubt people with more than $50k in tax debt are the kind of people who can't come up with the money, they're just the people who don't want to.
- ci5er 8y agoIf you live and work overseas, the IRS commonly miscalculates money owed. This can leave one stranded through no fault of their own and/or seriously interrupt a career. This law doesn't only sweep up tax evaders...
- mdorazio 8y agoHow much are you making that a miscalculation leads to an erroneous $51,000 tax bill beyond what you supposedly already paid?
- ci5er 8y agoAbout $120K~$150K depending on the host country and their particular income tax scheme. Which is not a crap salary, but it's certainly not over the moon Fortune 500 executive comp either. ($50K is about 1/3 of $150K, which is about what a W2 employee would pay - 1099 folks would pay a bit more) There's supposed to be a deduction applied to income taxes paid to your host country - up to a cap. There are two intersecting curves related to host-country taxes paid and US income taxes owed minus the exempted part, which I'm not going to describe here, but through key-entry error or whatever bureaucratic things that happen in paper-processing-office, it is not uncommon to get a bill on a year for about that amount. IF their response to your filing in a year (say 2012) gets lost in the mail and IF the same thing happens the following year - you can owe $100K (on paper - even though mistaken), and not even know it.
- neonate 8y agohttp://archive.is/iC53n http://archive.is/iC53n
- rosser 8y agoAnother (non-paywalled) article [0] on this says they're only denying/not renewing passports for people with at least $51,000 in tax debt. As such, this isn't exactly "picking on the little guy", and should probably be considered in that light. If you have an outstanding tax bill on the order of 1.5x (or more) than the median per capita income — if you owe more in taxes than most people make — that's kinda on you, and I'm really not moved to feel too badly about the government taking additional steps to recover that. [0] https://www.usnews.com/news/politics/articles/2018-07-06/hundreds-of-thousands-at-risk-for-passport-denial-because-of-tax-debt https://www.usnews.com/news/politics/articles/2018-07-06/hun...
- kybernetikos 8y agoAmerica is one of I believe only 2 countries that demand tax on income from its citizens who live and earn abroad (and who have almost certainly already paid tax on that income to the country in which they are living). My understanding is that they won't always even accept a renunciation of citizenship if they believe you're doing it to avoid paying them taxes. It's no surprise to me that there are significant numbers of expats with large unpaid tax bills, possibly from years of working, paying taxes in the country in which they live but never paying US taxes. Point being that this is probably not primarily targetting rich people who aren't paying their share, but people who are paying their share in the country in which they live and work, but are failing to pay an extra portion of tax to a country they left years ago.
- mdorazio 8y agoAnd? If you're that invested in another country, give up your US passport and get one with the new country. Alternatively, work to get the tax laws in the US changed. It's not like this stuff is a secret - if you want to work abroad you're going to get double taxed. Not paying the US portion of taxes is illegal. I don't understand the issue here, maybe you can explain it to me?
- firic 8y agoIt is not that simple to renounce US citizenship. As op wrote, if they think that you are renouncing because of taxes, they will flat out deny your request. Furthermore, changing tax law for an expat is virtually impossible because it is very hard to vote from abroad, and expats are very diverse so no one politician would care to represent them.
- yani 8y agoI am wondering how is this an incentive to pay outstanding taxes.
- yani 8y agoTo answer my question, it is intended for expats living abroad.
- Gibbon1 8y ago'intended'
- T-R 8y agoWhich is doubly disgusting, since the US is one of the only countries that double-taxes its expats.
- pokemongoaway 8y agoExactly! And then spend barely any of that tax money on what real Americans want!
- T-R 8y agoTo the extent this comment can be construed as anything but content-less partisan dog-whistling, it's pretty off the mark here. Obnoxious as this particular measure is, it was passed as part of the funding for a, relatively speaking, bipartisan infrastructure bill focusing on highways and rail. It's hard to imagine what "real Americans", whoever that's meant to imply, would rather it be spent on.
- pokemongoaway 8y agoI'm guilty of being obnoxious? It sounds like you could push that slippery slope until "obnoxious" is simply "any opinion I don't agree with." My comment quite effectively brings up the issue of majority of Americans not wanting to pay taxes for most of the things that taxes are actually going to - we are not being represented effectively. You're the one making this a partisan issue. Just look at some of the polls - or just how many Americans are using other country's infrastructures to avoid excessive US taxes. On topic with this article is the fact that US is collecting taxes worldwide on earnings not even being made in the US - by people who are merely US citizens and not residents! If my comment were so contentless, then you wouldn't have the authoritarian reply that I'm merely whistling for my underclass of "dogs."
- oculusthrift 8y agoFor everyone freaking out about this consider that half the country doesn’t owe the irs any money because they make too little. So poor people are by definition unaffected. In addition, not paying taxes is literally illegal so not sure why you should be able to blow money on vacations to europe when you are breaking the law and owe the people of the united states money.
- az123456 8y agoFirst locking kids in cages. Then denying citizenship to those who chose to serve their country. Then denaturalising citizens. Then this, just in last month. Little by little the march to fascism continues: http://press.uchicago.edu/Misc/Chicago/511928.html http://press.uchicago.edu/Misc/Chicago/511928.html
- learc83 8y ago>For everyone freaking out about this consider that half the country doesn’t owe the irs any money because they make too little. 45% of tax filers owe no income tax. That's not the same as owing nothing. Independent contractors don't have FICA deducted from their paychecks, and with the rise of gig jobs, there are quite a lot of "poor" people who owe 15% of their income at the end of the year.
- king_nothing 8y agoThe subtle shift is from purely civil penalties (ie garnishment, collections, seizing funds) to denying rights. There might not be a resurgence of debtors’ prison (except for unpaid alimony/child support) but other half-step curtainment of rights like voting are a real possibility. PS: “Literally” is an unnecessary word.
- garyvee_ 8y agoArticle without paywall: https://outline.com/ALAfkA https://outline.com/ALAfkA
- deleted 8y ago[deleted]
- deleted 8y ago[deleted]
- pembrook 8y agoHave a feeling this will end up extorting American expats and people who grew up abroad without ever living or working in the US (who are only US citizens because of their parents). When FATCA was passed, it flipped a switch that automatically made tens of thousands of people around the world who have never set foot in the US into criminals by default since they'd never filed US taxes (the US has the only global taxation system in the world). It sounds like those people who haven't spent the ridiculous sums of money on accounts/lawyers/etc needed to become compliant during the grace period will likely now have the threat of their passport being revoked held over their head. I'm sure we'll see the already record-high numbers of people renouncing their US citizenship accelerate. BTW, the US also has the highest fee to renounce citizenship in the entire world, it costs $2,350 to not be a US citizen. The absurdity of it all would be funny if it weren't so cruel.
- Spooky23 8y agoPretty sure that if you are deemed to have owed taxes, that must be settled before you can renounce.
- deleted 8y ago[deleted]
- duxup 8y agoI wonder how likely it is people would renounce their citizenship.... that US passport / citizenship is pretty powerful.
- abecedarius 8y agoFATCA seems like a great incentive.
- nradov 8y agoDuring the past few years under 10,000 US citizens have renounced their citizenship per year. So basically negligible as a percentage of the population.
- deleted 8y ago[deleted]
- onetimemanytime 8y agoSo "John" owes over $51K to the IRS but simply doesn't have the money or assets to pay. $51k may seem like a lot but it isn't when considering many years, penalties, fees and interest. So, is he condemned for life to never travel outside USA to visit ailing mother and so on? Or just apply for humanitarian exception passport and hope?
- nradov 8y agoThe IRS will settle tax debts for less than the amount owed if you can prove you have few assets and a low income. They're just like any other rational debtor in that regard.
- perl4ever 8y agoThe IRS doesn't even care about old tax debts in my experience. People perennially bring up the nightmare scenario (as suggested by the GP) where owing $1.99 turns in to a zillion dollars over the years. I was going through a background check a few years ago that required subjects to have paid all their debts to the government, and I found a temp job from a past tax year never sent me a W-2, so I filed an amended return to pay the $10 or whatever it was I owed. The IRS sent me back a check plus interest and a polite letter saying it was past the statute of limitations so they could not accept it. This sort of thing tends to confirm my prejudices about those who complain all the time about the IRS as a bogeyman.
- duxup 8y agoProvided you communicate with the IRS in good faith and can show them you're doing that, I've found the IRS to be pretty easy to deal with. It is when you don't respond, straight up don't pay for years, or lie, or something that it gets ugly. Granted everyone's mileage may vary.
- adventured 8y agoNo, not condemnded to life. IRS back taxes have a ten year statute of limitations (from the point of assessment). Formally they call it the collection statute expiration date (CSED). They can't collect after that. If you owe the IRS Wesley Snipes / Willie Nelson type money, they will typically sue you in court however (which can effectively extend the ten years by generating a suspension of the countdown).
- king_nothing 8y agoAnd so the totalitarian demagogue builds their “Berlin wall” to keep citizens in... anyone crossing will be shot. Any unapproved thoughts or speech will lower one’s social credit, eventually making them ineligible for travel, banking, voting, government services, etc... too low and they will be sent to reeducation camps. Parents and children split apart and sent to concentration camps. Blaming certain groups for a country’s problems. Where have I heard this before? hmm.
- dang 8y agoCould you please not use HN for ideological flames? It's not what this site is for. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- amaccuish 8y agoWhat was that about how awful it is that China stops people with debts from leaving?...