Congress Set To Revoke Passports For IRS Tax Debt
Feb 21, 2012, 2:31 pm
#62
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
I am an expat and now that I am living in a country where I intend to stay for more than 7 years (I have been living and working outside the US since 1994), I am working towards citizenship here in Cyprus. I have to live here for 7 years before I can start naturalization proceedings. I am planning on getting Cypriot citizenship for many reasons, not the least of which is to be in a position to renounce my US citizenship. Please note that I said "be in a position to"; I have not yet decided if I will do it. But certainly US tax laws and financial reporting (that are meant to capture the fat cats, but snag the little guy like me) are incentive enough to renounce my citizenship.
mahomei: your scenario is the one I expect to happen when I retire. My DH and I plan to live in Australia on a retiree investor visa. We don't plan to become Aussies, as it is very difficult to do so. All of our assets will have been removed from the US; the only tie to US will be receiving our social security benefits. These would be direct deposited to a bank account in the US that I will have wire transferred to Australia.
I wasn't planning on filing a US tax return as there would be no taxes due from our meager social security checks. If I am receiving cap gains, dividends, and interest on assets in Australia, how is the US going to know about it unless I tell them? I doubt Australia sends a 1099 or W-2 to the IRS. They probably send it to their tax agency and I'll pay any taxes due to Australia as that's where I'll be living permanently. If I were to have a part time business and make some money in Australia, how would the IRS know unless I filed the tax return? And if one files a tax return from abroad with all foreign income that is self reported, how do they know it's accurate as no matching W-2's or 1099's will have been sent?
The only reason I can see to file with the IRS once I've left the US is to be able to renew a passport. Let's hope this never makes it into law.
I wasn't planning on filing a US tax return as there would be no taxes due from our meager social security checks. If I am receiving cap gains, dividends, and interest on assets in Australia, how is the US going to know about it unless I tell them? I doubt Australia sends a 1099 or W-2 to the IRS. They probably send it to their tax agency and I'll pay any taxes due to Australia as that's where I'll be living permanently. If I were to have a part time business and make some money in Australia, how would the IRS know unless I filed the tax return? And if one files a tax return from abroad with all foreign income that is self reported, how do they know it's accurate as no matching W-2's or 1099's will have been sent?
The only reason I can see to file with the IRS once I've left the US is to be able to renew a passport. Let's hope this never makes it into law.
Even if you never again need a US passport, you will almost certainly have a very real need to keep filing US tax returns in order to better secure your assets/income streams in a legal manner.
Last edited by GUWonder; Feb 21, 2012 at 4:33 pm
Feb 21, 2012, 2:43 pm
#63
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
If the presumption is that being outside of the US is a basis for not having to file US taxes, then indeed that is an indication of being misinformed.
Whether or not outside of the US, US citizens are still subject to US tax authority and the federal income tax filing requirements, if any, related to that.
Last edited by GUWonder; Feb 21, 2012 at 2:49 pm
Feb 21, 2012, 4:20 pm
#64
Moderator: Manufactured Spending
Join Date: Jul 2011
Posts: 6,580
What happens if I don't? What can they do to me in Australia? Seize my social security check? They could have it as it won't matter much to me. How far would the IRS go to pursue my being a tax scofflaw legally? Mind you, I'm not talking about millions of dollars here nor am I a high profile person of prominence or fame. Would it be cost effective to pursue someone over 8000 miles away to get them to file a tax return when no taxes are even due?
Feb 21, 2012, 6:29 pm
#65
Join Date: Nov 2010
Posts: 627
The USA is the only developed country that taxes expats. I can definitely see this from the viewpoint of a pissed-off dual-citizen expat who decides to blow off the IRS.
What about a natural-born US citizen who never took an oath to take up arms who got ordered for induction into Vietnam and moved to Canada? They were going to be forced into what they saw as an unjust military entanglement, wanted nothing to do with it, and moved.
And we all know that Americans _never_ go to Cuba by changing planes in a third country.
I'm not going to get into a right-or-wrong debate here; just pointing out what could be considered a valid argument.
Last edited by mahohmei; Feb 21, 2012 at 7:54 pm
Feb 21, 2012, 7:41 pm
#66
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
When it comes to IRS/US Treasury, most non-compliance by US citizens abroad is probably due to negligence rather than any willful intent arising from a belief that non-compliance is unlikely to be detectable or that non-compliance is otherwise "justifiable".
A lot of US citizens who are born abroad or move abroad at a young age and live abroad permanently are often unaware of what they must do as US citizens abroad to comply with US tax and other US filing requirements. Some are even unaware that they are US citizens, with or without a Social Security Administration number.
The 50,000 USD amount from this proposal won't spare all of them if this gets implemented.
There are of course other US citizens who are also unaware that US citizens abroad are subjected to US tax authority and any filing requirements thereof. Many of those persons believe in a related myth: that US citizens becoming expats is being done largely to escape taxes. That is why support for this approach is not shocking to me, even as it is disappointing for those who believe that Americans who are not incarcerated should have a right to receive an ordinary passport so as to travel as free people.
A lot of US citizens who are born abroad or move abroad at a young age and live abroad permanently are often unaware of what they must do as US citizens abroad to comply with US tax and other US filing requirements. Some are even unaware that they are US citizens, with or without a Social Security Administration number.
The 50,000 USD amount from this proposal won't spare all of them if this gets implemented.
There are of course other US citizens who are also unaware that US citizens abroad are subjected to US tax authority and any filing requirements thereof. Many of those persons believe in a related myth: that US citizens becoming expats is being done largely to escape taxes. That is why support for this approach is not shocking to me, even as it is disappointing for those who believe that Americans who are not incarcerated should have a right to receive an ordinary passport so as to travel as free people.
Last edited by GUWonder; Feb 21, 2012 at 7:49 pm
Feb 22, 2012, 4:05 pm
#67
Join Date: Oct 2008
Location: Happily living in Frenaros Cyprus having escaped the near-death experience called Sofia Bulgaria
Programs: Etihad Guest Gold, DL FO and 1MM, and a bunch of others at a low level
Posts: 2,052
Even if you renounce your US citizenship, the US may continue to keep its claws in you for tax purposes for some years beyond that. If your place of birth is in the US, even a renunciation of US citizenship or the status of being born in the US without being subject to US jurisdiction (e.g. offspring of a couple on diplomatic duty in the US), then you may still end up having trouble given the way FATCA is being implemnted to force compliance on non-US parties that act as financial intermediaries (e.g. foreign banks). [One of the ways that the US may determine (non-)compliance with FATCA is whether or not those non-US banks search for persons who use a US ID when opening an account and to search for those who have a US place of birth.]
Feb 22, 2012, 4:36 pm
#68
Join Date: Feb 2010
Location: ORD
Programs: US Air, UA BA LH AI DELTA MARRIOTT CHOICE SGP
Posts: 9,883
keep the bums out !
Feb 23, 2012, 2:15 am
#69
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
It is meant to keep the "bums" in! 
This proposal is not needed to restrict the passport acquisition/retention allowances of those with substantial child support debts, as current law already restricts such persons' ability to acquire US passports. The states report up to US Health and Human Services with a list of persons to be blacklisted from passport acquisition due to child support payments being considered excessively overdue; and then US HHS supplies the State Department with a list of persons who have been blacklisted when it comes to ordinary passport acquisition; and the State Department is legally required to check against the list before issuing a US passport.
Indeed better than before in some ways, but also somewhat worse than before in other ways. There have been some recent government decisions involving FATCA implementation that are also quite negative with regard to determining FFI compliance with reporting thresholds.
Renunciation of US citizenship in 2011 reached a reported record high and that is despite the US government introducing a fee to formally surrender US citizenship. A lot of that increase is because the US's attempt to control international financial matters of foreign financial institutions are not doing those persons any favors.
This proposal is not needed to restrict the passport acquisition/retention allowances of those with substantial child support debts, as current law already restricts such persons' ability to acquire US passports. The states report up to US Health and Human Services with a list of persons to be blacklisted from passport acquisition due to child support payments being considered excessively overdue; and then US HHS supplies the State Department with a list of persons who have been blacklisted when it comes to ordinary passport acquisition; and the State Department is legally required to check against the list before issuing a US passport.
Renunciation of US citizenship in 2011 reached a reported record high and that is despite the US government introducing a fee to formally surrender US citizenship. A lot of that increase is because the US's attempt to control international financial matters of foreign financial institutions are not doing those persons any favors.
Feb 26, 2012, 1:58 pm
#70
Moderator, Hertz; FlyerTalk Evangelist
Join Date: Nov 2005
Location: KRK
Programs: UA 1MM, BA GGL, Hyatt Glob, Hilton Diamond and others
Posts: 12,690
This proposal can't be true. We're not thinking of adopting third-world type tactics for for own people. This looks more like an eastern european police state than the Land of the Free.
Next thing they will have uniformed guards making make us "show our papers" whenever we get to a domestic checkpoint.
Next thing they will have uniformed guards making make us "show our papers" whenever we get to a domestic checkpoint.
This is just awful. Not only are bills like SOPA and ACTA are trying to get passed, now they want to make it where they can take away your passport. Wow!
What's next? guards at airports running background checks before you board?
Feb 26, 2012, 4:19 pm
#71
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
When it comes to the US government and the paranoid, foolish fans of US government power over US persons, they seem to have ended up doing what they desire: increasing the power of the US government over fully-franchised US persons entering and exiting the country beyond what was even the situation during World War II or the Cold War.
Mar 12, 2012, 7:30 pm
#72
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
The Senate has unanimously approved a provision to a highway transportation bill that would revoke the passports of people with seriously delinquent tax debts.
Can't see the US House of Representatives trying to remove this provision.
Mar 12, 2012, 10:09 pm
#73
Join Date: Jul 2006
Programs: United
Posts: 2,710
US Treasury employees have one of the highest tax payment compliance histories in the US. Employees of most other parts of the US government are far more likely to owe the US Treasury money than US Treasury employees are to owe the US Treasury money. So I expect that US Treasury employees -- up and down the rank and file -- will be far less impacted by this proposal to restrict ordinary US passports than most others in America or beyond.
Mar 13, 2012, 6:59 am
#74
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
If he were considered then-employed by Treasury, whether then-considered delinquent or in compliance, at the time of the most recent examinations for the report upon which I relied in my comment, then he would be included in the fact that Treasury employees are amongst those with the highest tax compliance figures.
Mar 13, 2012, 11:49 pm
#75
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
So how does this proposal compel payment of money to the IRS from persons with dual-/multiple- citizenship status? Not very effectively.
Take the situation of a person with Swiss, Israeli and American (US) citizenship. If the US refuses to give such US citizen a US passport for use to depart the country, even Canada and Mexico are free to accept a US citizen's non-US passport(s) and/or other non-USG-issued ID (if different than a passport) for travel in and out of Canada and Mexico; and on return to the US, such US citizen could present herself/himself at a US surface border port of entry or US pre-clearance facility. [US citizens presenting themselves at a US border and recognized by the US as a US citizen cannot be lawfully denied entry into the US by the US Government (inclusive of agents thereof); such recognition of US citizenship status does not require presentation of a currently valid US passport, even as it may facilitate things, at a US port of entry.]
Sounds like the US government is going to encourage such US citizens to retain foreign citizenship status and/or shift business away from the US and into the hands of other countries. This may also act as an inducement for US citizens to acquire/retain foreign citizenship as a backup escape plan from the clutches of a government making the country into a debtors' prison of sorts for some of those who are US citizens without the benefit of dual/multiple citizenship status. Either lock up the tax delinquents behind real walls, as applicable under existing law, or recognize that even those US citizens considered to owe tax dues to the IRS have a legitimate right to acquire and/or retain US passports.
Take the situation of a person with Swiss, Israeli and American (US) citizenship. If the US refuses to give such US citizen a US passport for use to depart the country, even Canada and Mexico are free to accept a US citizen's non-US passport(s) and/or other non-USG-issued ID (if different than a passport) for travel in and out of Canada and Mexico; and on return to the US, such US citizen could present herself/himself at a US surface border port of entry or US pre-clearance facility. [US citizens presenting themselves at a US border and recognized by the US as a US citizen cannot be lawfully denied entry into the US by the US Government (inclusive of agents thereof); such recognition of US citizenship status does not require presentation of a currently valid US passport, even as it may facilitate things, at a US port of entry.]
Sounds like the US government is going to encourage such US citizens to retain foreign citizenship status and/or shift business away from the US and into the hands of other countries. This may also act as an inducement for US citizens to acquire/retain foreign citizenship as a backup escape plan from the clutches of a government making the country into a debtors' prison of sorts for some of those who are US citizens without the benefit of dual/multiple citizenship status. Either lock up the tax delinquents behind real walls, as applicable under existing law, or recognize that even those US citizens considered to owe tax dues to the IRS have a legitimate right to acquire and/or retain US passports.
Last edited by GUWonder; Mar 13, 2012 at 11:54 pm