GUWonder

The FAST Act provision for passport denial for proclaimed debts classified as "seriously delinquent" is still not fully implemented.

The US Treasury Secretary still has no certification process in place. This was scheduled to change sometime in the next few weeks or months -- as in perhaps well before summer 2017.

Consider this an authoritative heads-up for people to get their US consular services/passports finalized very soon if they are concerned about being hit by this law.

Whenever/if the US Department of Treasury moves ahead on implementing this law, that will result in the US Department of State going into action immediately on this front. And for those who spend money on such services and get denied an application, you'll have no more than 90 days to get things changed if not wanting to lose your fees for passport service.

WabiSabi89

For what it's worth, the IRS added a page to its website on January 17th discussing the passport revocation procedures. It says explicitly they have not yet started certifying passports as seriously delinquent but plan on doing so in "early 2017."

Aside from that there isn't a whole lot of insight into the law's implementation that couldn't be inferred from the text of the bill, but it's definitely worth a read through if it's something that concerns you.

See here:
https://www.irs.gov/businesses/small...n-unpaid-taxes

(US Tax Attorney that has been following the developments with implementation closely)

GUWonder

Today's executive order may have potential to slow this down further than indicated in the most recent two posts. How much slower is anyone's guess at this point.

TWA884

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TWA884
Travel Safety/Security co-moderator

susiesan

Very interesting article on Forbes web site about the situation with this law now being implemented. <deleted>. My sister lives in England and is caught up in this mess. She is in the process of getting British citizenship and a British passport now. I advised her to speed it up.

GUWonder

This article is the one to which you are referring:

http://www.forbes.com/sites/robertwo.../#52ba4a997df6

The author of that piece has been following this topic pretty closely and cares deeply about this topic and getting information out on it. I am curious to find out if he has been following this actual thread too.

She should seek to get a new US passport as soon as possible and perhaps line up new US passports and/or CRBAs for any young children she may have with a claim to US citizenship.

susiesan

My sister has 2 daughters under age 18 who have US passports. I think she is working on revoking their US citizenship. I know she is balking at the cost of all this but I told her the tax penalties are far worse if the IRS ever catches up with her. She owns property in England and I told her it could be seized. She also has a sizable Fidelity account here i the US and I advised her to close it and transfer all funds to England as soon as possible.

Added 3/18/17: I can report my sister has now obtained British citizenship. She has a British passport in addition to her US one so she can now travel if the IRS goes after her. She isn't going to revoke US citizenship but will just not renew her US passport next time it comes up. She hopes to just fade away from US radar.

GUWonder

Foreign asset seizures -- more so of primary residence homes -- is rather complicated even when it comes to US citizens resident abroad in countries with US tax treaties that include a mutual legal assistance/enforcement aspect.

The passport denial/revocation element of the FAST Act law pushed through by the Congress in 2015 doesn't really seem to be doing as much to get US citizens to pay up what the IRS claims as it does to just scare off US citizens from retaining or formalizing recognition of US citizenship; it also seems to be encouraging more people to seek to acquire/formalize dual-citizenship and thereby mitigate for the risk of one's own government making their life difficult in the exercise of international travel rights.

Beside the tax reporting risk -- for a huge number of people who owe no federal income tax -- there are other US reporting and US legal risk burdens that face US citizens abroad, including some US citizens that have never even been to the US. Can't say I'm surprised that more US citizens have been renouncing US citizenship since FATCA and FAST became law. Eventually there may be some more court cases outside the US that limit the US's extraterritorial reach into the lives of US dual-citizens resident in their country of citizenship outside the US.

susiesan

I believe my sister's plan is to get British citizenship and a passport now. She will not actually revoke but just disappear from US radar. When her US passport comes up for renewal she will let it go. She doesn't think the IRS even has her address in England to hunt her down. She uses another family members address for her US based accounts.

GUWonder

The IRS has announced that for this it will be sending IRS Notice 508C -- notice of certification of seriously delinquent federal tax debt to the State Department -- to the taxpayer’s last-known address and to the State Department. .

https://www.irs.gov/businesses/small...n-unpaid-taxes
When it comes to real US persons abroad, the statute of limitations applicable to IRS collections is tolled for as long as the person is outside of the US. In other words, she will be subject to the IRS for any amounts the IRS deems owed to it, for at least as long as she is outside of the US.

SkiAdcock

Given what's been happening w/ the travel ban, wonder if CBP would confiscate the passport upon return to the US, even if State Dept process (renewal, etc) wasn't being requested.

Cheers.

susiesan

Then I suppose my sister will never come back to the US even for a visit. Nor will my nieces ever be able to visit the US again since they are in the same situation as my sister. When they start working in England after they finish college they have no intention of filing tax returns with the IRS just because they have US citizenship from their birth to an American mother.

TWA884

US citizens who live abroad have no income tax liability on foreign earned income under $101,300 for the 2106 tax year (the threshold was slightly lower in prior years). Expats are exempt from paying income tax on unearned foreign income, such as rental, dividends, interest, capital gains etc.

susiesan

I know there is no tax liability. The problem is with the filing. There is no way my nieces will ever begin filing with the IRS even if they owe no taxes. They will not doom themselves to a lifetime of being in IRS computers to be harassed. My sister has never earned income in the US but because she used to live here she is in IRS computers from dividend and cap gains on investment accounts still in the US. She is not in compliance with FATCA.

GUWonder

The filing requirements themselves are at least as much an issue causing potential financial burden as the direct income tax liability after any applicable foreign earned income exclusion. And if an American resident abroad is in business for themselves outside of the US, it can be a monster of a cost. This and USG/FATCA-driven discrimination against Americans abroad is a large part of why the formal numbers of those renouncing US citizenship has risen substantially even after the US hiked the price by well over $1500.

IIRC, the US first started going after money from Americans outside of the US, for those with no US income, back when the government needed American conscripts for war. But not before 1860. Sometime after 1860, the situation starts to get increasingly complicated for Americans abroad who have already traveled out of the US to even settle outside of the US.

Technically, they'd be better off returning to the US at least every six months, as part of a risk/liability mitigation strategy. Even without a US passport.

That's not happening currently.