77 thoughts on “Passport Tort”

1. The Maunier link you refer to is very illustrative.
   http://isaacbrocksociety.ca/renunciation/comment-page-215/#comment-6972874

   He describes that the embassy computers are already being hooked up to the IRS computers to query tax issues.

   This should dispel any myth about revocation not being targeted at expats.

   All references to expats being “collateral damage” are invalid

2. Note also that it only takes one more small step for the embassies to query if tax returns were filed (yes/no) in order to acquire a passport.

   It will take very little effort by Congress or executive order to overcome any constitutional or policy issues about IRS data being shared with other agencies, and to pin passport reissuance upon yes/no filing of taxes.

3. “You think the U.S. has made a mistake? O.K. Up to you and your lawyer to sue the United States. And good luck to you.”

   Yes, 100% of the US tax code is written that way. Even when you get enough evidence that embezzlers operating inside the IRS made intentional malfeasance not just mistakes.

   Fortunately US Tax Court gets jurisdiction so you can file by mail instead of going to a court to file, the shape shifting defendant is the IRS instead of the US, and the filing fee is cheaper than in US District Courts. But you still have to select a US location where the trial will be held, and good luck getting there when you’ve been denied a passport.

   Since the IRS is defendant instead of plaintiff, they don’t have to state what underlying cause they invented as their reason for imposing penalties, and you don’t win by proving that their underlying cause was inaccurate. Every time you prove that you did something right, they change their argument. That’s how they eventually decided they had penalized me for illegally telling the truth on US tax returns, where the law requires perjury. Furthermore, if you have evidence disproving some of their assertions, they get to block you from submitting the evidence on grounds that it’s irrelevant, because they’re changing to different assertions.

   Experts have described fighting the IRS as boxing with shadows.

   Now, you’re lucky if you’re in the above situation.

   If you have to fight in a District Court or Court of Federal Claims, the inventor of lies is the US Department of Justice instead of the IRS. You can submit as much evidence as you want to disprove their lies, but the court will not care. Or the court will make up different lies. This is how we get a ruling that you have to fabricate social security numbers when the SSA is uncooperative and the IRS rejected ITIN applications. This is how we get a ruling that the IRS rejected a return even though the IRS still insists that they accepted the return. This is how we get a ruling that the DOJ doesn’t even have to consult the IRS to learn if the DOJ’s filings are true or not. This is how we get a ruling prohibiting you from telling the truth in court.

   ‘provides for the denial of passport to anyone (i) not providing a number, or (ii) providing “an incorrect or invalid social security number willfully, intentionally, negligently, or recklessly.”’

   Well, at least anyone who gets caught by that can defend themselves by a Federal Circuit ruling that forces them to fabricate social security numbers. Diamond v. United States, 530 Fed. Appx. 943 (Fed. Cir. 2013), docket number 2013-5036.

4. “Note also that it only takes one more small step for the embassies to query if tax returns were filed (yes/no) in order to acquire a passport.”

   It’s not a yes/no. When I finally figured out how to interpret some exhibits the IRS and DOJ filed against me in various courts, the IRS had records that a return was filed, later had records that the same return wasn’t filed, and later didn’t have either of those two records. If I understand correctly, the timing of when I figured that out was around the same time that some of Monica Hernandez’s cohorts were arrested.

5. I have no doubt as to what Meunier heard at a consulate but having worked on the plantation at one time there is a difference between talk and reality.

   I do not like the FAST law but what does it really say? Pull up the link.

   It does not provide any authority to deny a passport to non-filers. Non filing is not a sign that tax is owed, many non filers are not required to file.

   The authority is IF there is a $50,000 debt then and only then do you deny.

   Once a passport denial is made, according to the law itself, the Secretary of State then and only then has access to more complete tax records.

   Anything else is ultra vires.

   For further falvor, obtain the 1998 GAO report on non-filers.

   In that you will find that 36% of the general population is non-filers and 35% of passport applicants were found to be non-filers. That data is from 1995 but it shows there is and likely remains a large number of passport applicants who are non filers.

   Bottom line, if you are on the list of owing more than $50k you will not get a US passport. Nothing more and nothing less.

   However, there is a slipper slope which I am not denying but that is not the case today.

6. For those who have second passports available through family ancestry should use that opportunity rather than be handcuffed to a US passport.

   Featured countries

   Ireland (only a grandparent is needed)
   UK (parent)
   Germany (I believe if you can prove the paper trail, you could have a great great great and still qualify)
   Italy, France (parents again I believe)

   It’s worth checking all this out and screw the FAST Act.

7. One other thought –

   For the UK having a UK born grandparent also helps. You’d be eligible for a lifetime work permit and after 5 years of residency you’d be able to apply for a UK passport anyways.

8. Something else that has also happened is, people arrested on some petty infraction in U.S.A., the cops call Immigration and the person is returned to Mexico. The person’s wallet however stays at the police station and the person has like 60 days to claim it, but how? And their cash is returned to them in the form of a check drawn on a police station, and they have no ID and they are dropped off on U.S. soil just past the port of entry, instructed to proceed into Mexico. Now they are stuck in a border town with no way home.

9. @Don: Any descendant of a Dominican Republic citizen is automatically a Dominican Republic citizen. Alas, people born in the Dominican Republic to parents both born in the Dominican Republic to grandparents all four of whom were born in the Dominican Republic, are being denied citizenship because the great-grandparents were from Haiti.

10. “Bottom line, if you are on the list of owing more than $50k you will not get a US passport. Nothing more and nothing less.”

    No, there is a huge difference between that and what will actually happen.

    Bottom line, if you are on the list of ALLEGED TO BE owing more than $50k you will not get a US passport. Nothing more and nothing less.

    I had penalties alleged to be above $30K in one case. The IRS wrote a settlement for penalties totalling $0.00 after a subpoena for documents was served on the IRS’s attorney after calendar call in Tax Court. The IRS didn’t settle before the case was calendared and the IRS opposed my motion for reimbursement of reasonable litigation expenses because, well, even if a victim of Monica Henandez escapes legal penalties, why should they escape expenses costing more than a month’s salary? Still didn’t get refunds of my withholding though.

    (In an earlier case the IRS wrote a settlement for penalties totalling $1,000.00 because I illegally told the truth on returns. Although this underlying cause of frivolousness was not raised during the Collection Due Process Hearing, i.e. I had already been denied due process; and although I prevailed on the vast majority of the originally alleged penalties, the IRS opposed my motion for reimbursement of reasonable litigation expenses in that case too, and I still didn’t get refunds of my withholding.)

    Anyway, the way they pushed the allegations over $30K, they could have pushed over $50K if they’d wanted to. There’s no limit to the amount of abuse they can heap on a victim.

11. The IRS can manipulate via penalties / interest to push it over $50,000 and knowing damn well the defendant has to trump up cash for an attorney to motion a federal judge.

    I wonder what the IRS would do if they knew the taxpayer involved had another visa waiver passport and revoking the US passport causes no inconvenience (as long as they avoid the US), but doesn’t actually improve its bargaining power over the individual.

    Then we’d be in the world of charging someone with tax evasion and trying to invoke extradition treaties etc.

12. @Don

    Is there anything to stop someone with another visa-waiver country’s passport from entering or exiting the US on that country’s passport? Until the US starts enforcing its own laws requiring US citizens only enter and exit the US with a US passport, this law will have some major work-arounds. Just as FATCA fails to detect US citizens with no indicia, specifically a non-US birthplace.

13. What if some moron at a bureau makes a typo and links your name to the IRS list even though you owe way less than $50k. Errors like that happen all the time. If it does happen does it mean you simply cannot travel until you resolve the issue?

    I am happy enough to have also another EU passport. But US citizens need to travel in/out USA on the US passport. If somebody like me gets into such situation when he is locked inside the U.S., can the person use his foreign passport to get out?

14. @George is correct. Remember, at this point there is only a statute saying the passports can be revoked. How the statute is enforced is unclear to everybody including the workers at US embassies. We need to wait for administrative guidance from both the IRS and State to see how they do it. That guidance is usually regulations, or something less formal but still written guidance. The devil is in the details and nobody knows yet.

    So if the guy says “computers are already being installed at the embassy” I think he’s full of it, because no one knows how the procedure works yet. Plus, in a sense this is more complicated than FATCA because you got 2 big govt agencies involved (IRS and State) rather than just IRS which is the case with FATCA.

15. @Hanz, “If somebody like me gets into such situation when he is locked inside the U.S., can the person use his foreign passport to get out?”

    You will likely need to drive out and go to Canada or Mexico.

    There are no exit checks per se other than airlines and cruise ships that require API (Advance Passenger Information).

    So you would need to go to like Vermont and then drive in to Quebec and then fly out of Montreal.

16. @Socrates, there will need to be a constantly updated database with name, DOB and SSN that is solely persons owing more than $50k. They are not going to let State have access to their master file database.

    State will then check to see if an applicant is on that list. If they are not on that list, they will keep moving forward, if the applicant is on the list the application will halt and they will be notified.

    It also looks like State will need to querry that database against all valid passports outstanding and if there are enough matches there will be a revocation. That is going to be more complicated.

    And as you said there is going to be a new 7 FAM manual and likely some published guidance that will be subject to public input.

    Oh and remember there has been a denial of US entry on the books for decades that was passed by Congress and remains unimplemented because State and IRS can not make it work.

17. @George–how long do you think it takes for them to update the 7 FAM manual so that this new passport denial statute is included? And why do you think IRS will not give State access to the master file database?

    Also, from my reading of the statute and conference report, if you have an existing tax debt (incurred before Jan 1 2016 or before they start enforcing the new passport law), then you are in the clear and should not have your passport cancelled/revoked. Why? Because IRS is required to say in the original Notice of Levy/Lien that you are subject to the passport revocation. So if you already received such a Notice of Levy it naturally will not say that because this new law hadn’t been passed/enforced yet.

    From the joint explanatory statement of conference cmte (pg 40):

    “The provision requires notice to taxpayers regarding the procedures. First, the provision adds the possible loss of a passport to the list of matters required to be included in notices to taxpayer of potential collection activity under sections 6320 or 6331. “

18. More on what does the law say but being ever aware of the slippery slope.

    1. “upon receiving a certification described in section 7345 of the Internal Revenue Code of 1986 from the Secretary of the Treasury, the Secretary of State shall not issue a passport to any individual who has a seriously delinquent tax debt described in such section.”

    Everything is business as usual at State, until and unless they get a Certification of one person or a list of persons. This will be a form of name and shame list, but it is NOT access to a master database.

    But it is important to remember that the language here is “shall not.”

    What is definition of “tax debt?” Does that include interest, penalties, FBAR penalties?

    2. “The Secretary of State may revoke a passport previously issued to any individual described
    in paragraph (1)(A).”

    This is “may revoke” it is not shall revoke, so I would guess that State will be very hesitant to revoke passports of anyone overseas. If they revoke overseas it will be a big problem for the person and for State.

    The track record of State on shall language is usually “shall not” in practice.

    3. “the Secretary of State is authorized to deny such application and is authorized to not issue a passport to the individual.”

    So if you do not have a SSN, list a wrong SSN, it remains business as usual for State, they can issue a passport..
    ____________

    Where am I thinking?

    Need to see the next 7 FAM manual for sure.
    I do not think that FBAR penalties are applicable at all with this, thoughts? (having read more FBAR clearly does not fall within this)

    Granted I do not like this new law, terrified of the slippery slope, but do not think many expats are going to get caught up in this as it is written.

    But the law is very clear that State will ONLY get a list of Name, SSN and amount of tax debt SOLEY of those owing more than $50k which is tax, interest, tax penalties but pretty clearly not FBAR.

19. @Socrates, “And why do you think IRS will not give State access to the master file database?”

    The Statute itself is very clear on this;

    ‘‘(A) IN GENERAL.—The Secretary shall, upon receiving a certification described in section 7345, disclose to the Secretary of State return information with respect to a taxpayer who has a seriously delinquent tax debt described in such section. Such return information shall be limited to—

    ‘‘(i) the taxpayer identity information with respect
    to such taxpayer, and
    ‘‘(ii) the amount of such seriously delinquent tax
    debt.

    ‘‘(B) RESTRICTION ON DISCLOSURE.—Return information disclosed under subparagraph (A) may be used by officers and employees of the Department of State for the purposes
    of, and to the extent necessary in, carrying out the requirements of section 32101 of the FAST Act.’’.

20. @Socrates on other thing to think about, the master database file has been subject to abuse by employees taking looks at neighbors and celebrities.

    To open that up to another government agency? Think of the safeguards that would need to be in place? Treasury can not safeguard it so think for a moment the danger of that database being available to another agency…..that has branches overseas????

21. @Socrates, great find in the Conference Report! Also your thoughts on notice requirements very helpful to the discussion.

    You are spot on that an old notice is moot.

    In order to be affected, there must be a fresh notice with a fresh statement on the notice concerning FAST.

    Not trying to be an ostrich but the number of people affected is rapidly shrinking, still its a bad law and is ripe for getting worse. It can be made far worse with a minor amendment of a comma here and a new word there.

22. @George. Thanks very much for that analysis, you indeed sound like you spent time on the plantation. “If they revoke overseas it will be a big problem for the person and for State.”: I hadn’t considered that, but makes sense. State is giving itself big problems for its embassy personnel if it starts getting into the business of making Americans effectively stateless (of course many have other passports) . I see this limited to the homelanders except in rare cases.

    However, you say “This will be a form of name and shame list, but it is NOT access to a master database.” Therein lies the difficulty because what’s the difference between a name and shame list and a master database? It seems the same thing.

    Interest and penalties are part of the 50k threshold cause that’s a normal part of the tax levy, but I agree FBAR is separate because, as far as I understand, falls outside the Notice of Levy/Lien procedures that the passport cancellation statute emphasizes.

23. @George–regarding Conference report, thank you.

    “there must be a fresh notice with a fresh statement on the notice concerning FAST.”–yes, but I think the IRS only gets 1 shot at sending the Notice of Levy, etc. Maybe IRS can send Notice a few times but it’s essentially limited to a certain period of time in the past and then the Levy/Lien is formally made and the die is cast. So if the Levy/Lien has already been formally made, then IRS can’t send a fresh notice like after this passport law goes into effect. That’s how I read it.

24. @Socrates, “Therein lies the difficulty because what’s the difference between a name and shame list and a master database? It seems the same thing.”

    The taxpayer master file is going to be a separate system so that security can be absolutely ensured. It is not/will not be cross connected to any other systems. To login, you will need to be at a dedicated terminal that only has access to that system. There will be exceptions but minimal, access will be rightly highly guarded as its just too sensitive and Treasury has already sufferred breaches.

    The Statute states EXACTLY what information State has access to “(i) the taxpayer identity information with respect to such taxpayer, and ‘‘(ii) the amount of such seriously delinquent tax debt.”

    Treasury COULD create a system whereby State has access to the massive taxpayer database BUT can only querry the above two items allowed by Statute. The Statute does not allow them to get any more information because if they did, it would violate another law! By way of example, its unlawful right now to give State access to all taxpayers to see of they filed or not.

    Because of the danger of unlawful access, the only solution for Treasury is to set up a separate but smaller IT system between Treasury and State in which they both have access to and the sole information is taxpayers owing more than $50k and identifying information. If its small enough….it could be paper based.

    Treasury will NOT be eager to have another large access looking into its files and risking security breaches. There are “turf issues” involved.

25. @Socrates, I think you are right on the old notice v fresh notice.

    But did you notice the language that the taxpayer must be notified at the same time that State is notified?

    Lets assume a brand new $50k notice is sent out February 2016 that includes all the language required.

    Two months later they get around to notifying State. When they notify State they must notify the taxpayer again that State has been notified. That is a nice safeguard.