US Financial Institutions Cancelling Foreign Residents’ Accounts

US Financial Institutions Cancelling Foreign Residents’ Accounts

US income taxes change every year, usually as a result of laws passed the previous year. And, this year is no different. The most significant change is the previously reported link between tax compliance and US passport issuance and renewal. This was a line item included in the highway funding bill President Obama signed on…

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New Website Helps US Victims of Identity Theft

New Website Helps US Victims of Identity Theft

Identity theft is a growing problem worldwide, with almost a half million complaints in the US in 2015, a 47 percent increase over the previous year. To provide assistance to the victims, the head of the Federal Trade Commission (FTC) in the US, Edit Ramirez, has announced a new website. It’s identitytheft.gov. On the website,…

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Why Using Credit and Debit Cards is Better than Using Cash

Why Using Credit and Debit Cards is Better than Using Cash

Although the use of cash is decreasing around the world, Mexico is still the king of cash. According to MasterCard, 96% of transactions in Mexico are made in cash, while internationally, the figure is only 46%. Luis Mauricio Torres, a researcher of the Mexican Institute for Competitiveness (IMCO), and Manuel J. Molano, Deputy Director General…

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It’s Now Law: Delinquent US Tax Debt Can Limit Your Travel Rights

It’s Now Law: Delinquent US Tax Debt Can Limit Your Travel Rights

Courtesy of Senator Orrin Hatch (R-UT) and US Congress, it is now law: Anyone with “seriously delinquent tax debt” (greater than $50,000) risks having their US passport revoked or not renewed. This tax provision was part of the transportation bill President Obama signed into law on December 4th, 2015. Don’t be fooled by the seemingly…

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Passports and Delinquent US Taxes

Passports and Delinquent US Taxes

By now you may have heard about the passport provisions of the Transportation bill currently being considered by Congress. This is the most recent attempt by Sen. Orrin Hatch (R-UT) to take passports away from people who have “seriously delinquent” tax debt. If enacted into law, those who owe more than $50,000 could be in for special treatment.

Under the bill, the IRS could choose to let the Treasury Department know if a person is seriously delinquent. This means an IRS debt over $50,000 (interest and penalties are included in arriving at the dollar amount), and having IRS previously filed a lien or a levy to collect the tax.

Tax payers with installment agreements, offers in compromise, or collection due process hearings would not be included as “seriously delinquent.” However (this is not explicit in the bill, but I can tell), liabilities labeled “currently not collectible” by the IRS could be “seriously delinquent” despite being uncollectible.

So, on one side, the IRS could acknowledge that the debt is not currently collectible because the taxpayer doesn’t have the means to pay, but on the other hand, report it anyway to the Treasury Department.

Names reported to the Treasury would be turned over to the State Department. State, in turn, would not authorize new or renewal passport people on the list. It also can, but is not required to, revoke previously issued passports. As a side note, not providing a social security number would be grounds for denial of a passport. There are many US citizens—especially abroad—who do not have social security numbers, an exceptionally difficult thing to get while residing overseas.

These developments are cause for alarm, especially for expats, when huge penalties arise quickly for failure to file something as simple as an information return. Thank Sen. Hatch for his diligence.

Meanwhile, the transportation bill has another gem that should not go unexamined. It also requires the IRS to turn over part of its old inventory of uncollected tax liabilities to private debt collectors. The IRS has authority to do this already, but the new bill would instead require the IRS to contract with outside bill collectors.

Stay tuned.