According to a post on the Democrats’ Senate Floor Twitter feed, 78 Senators voted in favour of Orrin Hatch’s Trade Facilitation and Trade Enforcement Act (S. 1269), which includes the passport revocation provisions discussed yesterday: to revoke passports from people with US$50,000 of unpaid taxes & fines, or people who never obtained or do not provide a Social Security number.
In November 2014, American Citizens Abroad issued a position paper explaining why passport revocation is an inappropriate and dangerous means of tax enforcement. Patrick Weil, in a Yale Law Journal article, has detailed the long history of abuse of the administrative power to revoke passports. And, as stated here previously:
Due to the U.S.’ sharply harsher penalty structure on under-reporting of similar assets & items of income simply because they’re located in another country, it’s likely that a disproportionate number of victims of this bill would be U.S. citizens in other countries. Hatch is the chairman of the Senate Finance Committee and the most prominent Republican supporter of Chuck Schumer (D-NY)’s Ex-PATRIOT Act, another well-known emigrant harassment proposal.
The roll call on this “trade facilitation” bill (showing the votes of each Senator) was posted after I first wrote this; it shows that all 44 Democrats, 32 Republicans, and both the independents voted for the bill, while 20 Republicans voted against and 2 Republicans did not vote. The “yea” voters include not just traditional enemies of the diaspora like Chuck Grassley, Chuck Schumer, Jack Reed, and Harry Reid, but FATCA opponent Rand Paul as well.
Similar passport revocation provisions passed the Senate once before three years ago (in a highway funding bill) but got shot down by a competing House highway funding bill which coincidentally did not include any passport confiscation provisions. On the bright side, The Hill has predicted that this “trade facilitation” bill, too, will get nowhere in the House — though again, not due to any concern for the diaspora, but rather because of the bill’s controversial anti-currency-manipulation provisions (Title VII).
The twisted procedural history
The Atlantic describes the decision to bring S. 1269 up for a vote as a concession to Senate Democrats, as they support its anti-currency manipulation provisions. In total, four separate trade-related bills were brought up for votes. According to reports in The Hill, Harry Reid (D-NV, another long-time supporter of passport confiscation) had been pushing for all four bills to be combined. However, due to a split between Senate Democrats and President Obama, the four-in-one deal broke up and instead the “trade facilitation & trade enforcement” bill was scheduled for a separate vote.
Or, more precisely, H.R. 644 (originally a bill providing for charitable deductions for donations of food inventory, which passed the house in April) was scheduled for a Senate vote. Then, they replaced its contents with the text of S. 1269 — the Trade Facilitation and Trade Enforcement Act, which includes the passport revocation provisions discussed yesterday — and voted to pass that. Now, in order for this to become law, the totally different versions of the bill passed by the two chambers still have to be reconciled in conference, and the bill signed by President Obama.
Hatch was very proud of himself for all the procedural manoeuvring in which he was willing to engage to get passport confiscation to the floor, as you can see from his press release.
While we could not – and still cannot – guarantee that all four bills will become law, we certainly want to see the custom and preferences bills pass the Senate.
I’m a co-author of both of those bills. They are high priorities for me. It was never my intention to let them wither on the legislative calendar. I was always going to do everything in my power to help move them forward.
S. 1269, which contains the passport confiscation provisions, is what Hatch refers to as the “customs and enforcement bill”; “Trade Promotion Authority” is S. 995, “Trade Adjustment Assistance” is S. 1268, and “trade preferences” is S. 1267.
Reactions to the trade bills
The Asian Trade Centre, a Singapore-based organisation, criticised the efforts to hitch this awful “trade facilitation” bill to the bigger wagon of the trade preferences bill:
But insisting on including this set of rules alongside the TPA debate just illustrates the nature of the debate in Washington. It is not about creating helpful rules to guide trade in the next five years. It is about following narrow, domestic partisan interests and using flawed arguments.
In the end, it also shows the rest of the world that the United States cannot be viewed as a trusted partner because—no matter how much you bend to accommodate the Americans in a negotiation—they will always add one more bitter pill and insist that you swallow it. Even then, passage of the final deal is never assured.
Bernie Sanders, for his part, is opposed to all these trade bills because of working conditions in other countries whose exports to the U.S. may increase under the bill. In particular, he doesn’t like it when groups of foreign blackmailers confiscate migrants’ passports and hold them hostage in order to extract money from them; as he stated in a speech on the Senate floor in opposition to one of the trade bills (161 Cong. Rec. S2783):
32 percent of the [electronics] industry’s nearly 200,000 migrant workers in Malaysia were employed in forced situations because their passports had been taken away or because they were straining to pay back illegally high recruitment fees. In other words, American workers are going to be forced to compete against people in Malaysia–immigrant workers there whose passports have been taken away and who can’t leave the country and who are working under forced labor situations.
Yet he has nothing to say when domestic blackmailers threaten to do the same thing.
The midnight knock on the door
The first inkling we had of these passport confiscation provisions was on Monday, and the earliest news of this deal to get the “trade facilitation” bill to the floor was not even a day in advance, when it got posted on the Republican Senate “Floor Monitor” Twitter feed, while I was still sleeping. I found out about it during my lunch break when I saw Mark Twain’s comment pointing to Hatch’s speech, and the Senate Republican Policy Committee posted details of the vote.
At 10:30 a.m. on Thursday, May 14, 2015, the Senate is scheduled to begin consideration of H.R. 1295 and H.R. 644. An amendment containing S. 1269 (Customs Enforcement) will be offered to H.R. 644. At noon on Thursday, May 14, 2015, the Senate is expected to proceed to a roll call vote on H.R. 644, as amended with S. 1269, at a 60-vote threshold. This will be the second in a series of two votes at noon.
Do you really want to keep waking up for the rest of your life in fear that 535 demagogues in a distant city have decided — in the dead of night while you were sleeping — that omelettes are on the Homelanders’ breakfast menu and you are the egg who is going to be broken?
Externalising the costs and internalising the benefits
The Senate Republican Policy Committee’s summary of S. 1269 failed to mention anything at all about the passport confiscation provisions of the bill; they simply stated it would “decrease deficits” without explaining exactly on whose backs they planned to balance the budget. Specifically, the Congressional Budget Office claims that passport confiscation will raise US$231 million of revenue in the next four years, and US$398 million by the end of 2025. This is barely more than half of the US$743 million the JCT claimed this provision would raise the last time around, back in 2012.
As discussed in S. Rept. 114-45 (see Senate Finance Committee PDF if the congress.gov link isn’t up yet), all major items of spending in this bill are for the benefit of Homelanders: $179 million in reductions of customs duties collected due to an increase in the de minimis threshold below which no duties are collected; $200 million in increased payments to domestic manufacturers under the Continued Dumping and Subsidy Offset Act, et cetera. But rather than sufficiently increasing customs user fees to pay for all the additional spending, Hatch and his gang decided to hide the costs elsewhere — just like how FATCA got into the HIRE Act.
The absurd speed at which the Senate managed to get this law for revocation of passports to the floor — while dragging their feet on concessions to the concerns of emigrants — clearly demonstrates the precarious position of those who choose to retain their U.S. citizenship while living outside of the United States, in particular those who have no other citizenship. Congress has no reason to care about your concerns; your votes are diluted among all fifty states, and you don’t even have a non-voting representative like the Puerto Ricans or the American Samoans.
What can you say, other than DONATE TO ADCS.
If you are an ex pat American with no other nationality to protect you then you are in grave danger
Would facebook people start posting at Republicans overseas on this
Is there any other nation with such a passport policy or will America be exceptional
This is an offshoot of the no New taxes pledge for Grover Norquist. No bills can be passed which raise taxes, so they have to come up with bullsh_t revenue. Any of the other awaiting sh_t bills that claim revenue gains are going to start popping up.
This is less of a threat to the people that are aware and protecting themselves with whatever necessary method. This is also less of a threat to those that don’t care about their US citizenship. This is a huge threat to the unknowing US citizens who have no idea what is coming their way.
C-SPAN has video of the debate; haven’t watched it yet to see if anyone says anything stupider than usual
http://www.c-span.org/video/?325951-1/us-senate-debate-votes-trade-bills&live=
Media coverage is focusing on the currency manipulation provisions (Title VII). No mention of the passport revocation “revenue offset”.
http://www.globalpost.com/article/6549072/2015/05/14/us-senate-passes-enforcement-bill-trade-impasse-eases
http://www.reuters.com/article/2015/05/14/usa-trade-idUSL1N0Y51YI20150514
http://www.lse.co.uk/AllNews.asp?code=z92i2kyw&headline=Obamas_Trade_Agenda_Currency_Manipulation_Creep_Forward_In_Senate
So they are figuring five thousand passports will be revoked
Tax dodgers in the homeland will not give a damnable because they are living in the swamp
Expats will be screwed
Mark twain this will be devistating to the uni national emerican expat
On the bright side, The Hill thinks it’s unlikely this bill (it calls it “the customs bill”) will go anywhere in the House
http://thehill.com/policy/finance/242076-senate-approves-trade-enforcement-measure
Obama is also opposed to the bill because of the anti-currency manipulation provisions:
But unsurprisingly, Schumer loves it:
As always, The Hill article is open for comments (they use Disqus)
As always the middle class takes the hit with these things.
The rich can just go out and join an investment programme to obtain a good visa waiver passport like in Malta for example (plus Malta part of the EU).
Or even if you’re Jewish, Isreal will give you a passport.
I suppose if someone was really really desperate you could convert and apply afterwards?
These measures only cause hassles and create very very little extra tax revenue.
Eric,
Carl Levin is NO longer a Senator so he could have not voted for this bill.
After reading the ACA’s statement on revocation, if this measure passes in the House as well and Obama signs it, shouldn’t the ACA then reconsider its mission statement?
Don
American. Citizens living abroad is going to be s shrinking demographic
AC
Honestly I don’t see a problem with this. I am always amazed when they list the numbers of IRS agents with outstanding tax debts, or presenters on MSNBC (go taxes yay!) or people working for capital hill etc.
when the IRS kicked the shit out of me with the OVDP I just dropped them a huge check to pay the money. What the hell choice do you have?
Neil if you are an ex pat overseas with no other citizenship it is very easy to run up a fifty thousand dollar fbar penalty finding yourself without a valid passport
In 1973 I did not see anything wrong with thar look how its abused today
Neil what difference does it make for an Irs agent in the Usa go have his passport revoked
Your example is homelander centric not ex pat centric
@Neill
Well, someone who is in the U.S. doesn’t necessarily need their U.S. passport. Many Americans can live quite well without one, but not someone who needs one to get back into the U.S. or even just to reside abroad. I reckoned once that about half of Americans abroad are dual nationals, but there are a lot of long-term single nationals abroad as well.
The big question is who the IRS will go after. In 2011, the Government Accountability Office found that the State Department in 2008 alone had renewed the passports of 224,000 people who they know owed a combined total of $5.8 billion dollars (an average of $25,000 per person). That is just one single year and that was before FATCA. If it passes, one would hope that they would use the tax law to bring down a modern day Al Capone rather than some badly informed person who hasn’t been filling in their FBARs because they didn’t even know the U.S. considered them to be a citizen, People are worried because they don’t trust the U.S. government.
Personally, I hate it when they swap the contents of bills. It’s bad for transparency. Even the record of the vote makes it look like it was about incentives for encouraging people to donate food (who’s going to want to vote against something like that?). Most importantly, badly-written measures pass before they can be stopped. The kicker line was really:
Do you really want to keep waking up for the rest of your life in fear that 535 demagogues in a distant city have decided — in the dead of night while you were sleeping — that omelettes are on the Homelanders’ breakfast menu and you are the egg who is going to be broken?
Please forgive if this is over simplistic, I am not attempting humour here and would appreciate some input.
I naturalised as an Australian over 20 years ago, and lived happily ever after until I was coerced by Homeland Security to get a US passport. Since receiving that document, it is their opinion that I never left the fold. This of course flys in the face of all evidence to the contrary, and is in fact my only connection to my former home. As I have always considered myself Australian since naturalisation, I never kept up with the U.S. tax mans whims. I never heard of, nor filed an FBAR.
Now, the question is; If I never filed an FBAR, and surely that means I owe over 50k in fines, can I find a way to have that millstone ( er, passport ) revoked?
Renunciation has never been an option in my case, because of the fact that I have to start by swearing that I am an American, and I don’t believe that I am. And my relinquishment suddenly doesn’t count because of the passport. I have pretty much given up the prospect of visiting the US because of all the recent developments. Is there maybe a possible way to turn myself in and volunteer for the “penalty” of losing my passport? I know if I seem anxious to do it, they will be unlikely to cooperate.
@Publius
I completely agree with the viewpoints expressed in the quoted document from American Citizens Abroad. There are many serious problems with passport revocation.
“The big question is who the IRS will go after.”
I think this is indeed the big question. For the typical Brocker (ie not someone like myself) who has lived outside the US for many years if not their whole life–and really doesn’t want a US passport in the first place–this will only reinforce their decision to avoid both the US and the US passport. This latest legislation neither helps nor hurts the IRS in their misguided attempts to harass ordinary people.
For the very wealthy, they can afford to stay outside the USA for as long as they want, and probably buy their way into some other passport or comfortable living arrangement outside the US–so this action is unlikely to affect them either.
For expats who do plan to return to the US within a well defined time period, they already know they will have to settle up with the IRS when they return to the US if not sooner. So this legislation can only slow down their return–not a desirable outcome.
For anyone who is living outside the US and has tax obligations that are remaining unpaid indefinitely, they probably already have other (preferred) options as to where to live permanently. An unfriendly gesture such as this isn’t likely to bring in much new revenue.
ProudAussie – there is a lot you need to consider. Read as much as you can – there is a lot on this blog and many other places, don’t come to any quick decisions on paths forward, don’t believe everything and be skeptical. There is an entire ‘compliance industry’ that will suck you dry along with the IRS ‘programs’.
Re this absurd Senate bill that has passed – please do post it on Republican’s Overseas and press them for both an explanation and lobbying against it.
@ProudAussie
Passport revocation doesn’t mean that you are relieved of your obligations as an alleged “US person”. It means you are given a one way travel document to the US where you would be met by the IRS (or whichever branch of the USG carries out arrests on the IRS’ behalf) at a US airport and arrested for tax evasion.
At least–that is the worst case scenario. It isn’t certain that things would play out in the worst possible way–but my point is that the scenarios aren’t good–as a solution to IRS problems this seems a non-starter.
And to get the US to revoke your passport in this way, you would first need to get the IRS to actually assess the $50,000+ in penalties. This presumably means making a very deliberate attempt to appear on their FBAR/FATCA radar (assuming you are currently under the radar) and making yourself vulnerable to whatever FATCA enforcement exists in Australia–even if you don’t them up on their “offer” to accept one-way passage to the US.
And I assume (someone correct me if I’m wrong) that FATCA is currently being fully enforced in Aussie. There is a judge in Canada whom I’m hoping will issue an injunction shortly after Aug 5, 2015 to block full FATCA enforcement in Canada. I’m not aware of any similar action in Australia. I’m hoping the FATCA activism in Canada will eventually spread to other countries including Australia but in the short term I’d assume FATCA will be fully enforced in Australia.
@Steve
Thank you for your sound advice. I already understand that attempts by me to become compliant will be akin to jumping into a deep dark hole, and volunteering for some serious abuse. I just want out. And I honestly don’t feel that I should offer up a large portion of all my worldly possessions in order to obtain my freedom.
@Dash
Thank you for your response as well. As far as I know Fatca kicks in here in July, at the beginning of our tax year. Banks are already asking whether new customers are US persons. Sadly I stopped being under the radar when I foolishly sought help from a US consulate. I understand your point about the IRS having to assess the penalties first, and that could be problematic. I’m just hoping to find a temporary crack to slip through. My Aussie passport works just fine, that other one is an abomination to me.
In retrospect, they would probably consider the fact that I applied for that passport as being evidence enough of my supposed intent, even if they took the actual document off me.
On a separate note, I couldn’t help noticing after I typed the word abomination, that it is very similar to Obama Nation. I’m sure I’m not the first to notice.
@Tim: ouch, that was embarrassing. Must have seen Durbin’s or Cardin’s name and my brain did something stupid with it. Fixed.
@ProudAussie
By “on the radar” I meant whether the USG knows about your specific Aussie bank accounts so as to potentially assess the penalties–not whether you made an inquiry in general terms to the consulate. The general inquiry won’t directly lead to a tax assessment but once they know about your bank accounts it will. Hopefully if you have existing (not new) accounts and can keep them rather than opening new ones after July, you can stay under the radar.