cross posted from Citizenship Solutions
Circa 2015:
US Passport application links Citizenship (State Dept) to Taxation (Treasury) to enforce "Taxation based Citizenship" https://t.co/UIINgzbpF2 via @ExpatriationLaw
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 2, 2018
The logical progression continues …
I just got off the phone with someone who has just received a letter from the IRS stating that:
1. He had a “seriously delinquent” tax debt; and
2. That notice of the “seriously delinquent” tax debt was being forwarded to the State Department.
(In 2016 I did a presentation on this topic just a few months after the law came into force. You may view the presentation here.)
It is clear that the letters from the IRS have started to go out. The purpose of this post is to explain in simple terms what this means for Americans abroad.
To put it simply:
1. If you have received the notice and you do NOT have a current U.S. passport then:
The State Department cannot issue you a passport.
2. If you have received the notice and you DO have a current U.S. passport then:
The State Department may revoke your passport but is not required to revoke your passport.
For most Americans abroad (who certainly have a valid U.S. passport unless they are dual citizens) receipt of the letter does NOT mean that they will lose their existing U.S. passport.
Like all aspects of living as a U.S. citizen abroad, this issue will be governed by both the IRS and by the State Department.
It began with Sec. 3201 of the FAST Act (which naturally is a revenue offset provision and one of the final gifts from the Obama administration) …
Like most of life as a U.S. citizen, it all starts with the IRS …
Internal Revenue Code Sec. 7345 provides the mechanism to certify the “seriously delinquent tax debt” and then forward notice of the debt to the State Department. The relevant language is:
If the Secretary receives certification by the Commissioner of Internal Revenue that an individual has a seriously delinquent tax debt, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 32101 of the FAST Act.
You can read how the IRS interprets this provision here:
https://www.irs.gov/businesses/small-businesses-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes
Once the State Department receives the “certification” it will respond with “denial, revocation, or limitation” …
According to the State Department:
Passports and Seriously Delinquent Tax Debt If you have been certified to the Department of State by the Secretary of the Treasury as having a seriously delinquent tax debt, you cannot be issued a U.S. passport and your current U.S. passport may be revoked.
If you are overseas you may be eligible for a limited passport good for direct return to the United States.
We would suggest that if you have seriously delinquent tax debt, you contact the IRS to resolve your debt before applying for a passport. If you do not resolve your tax issues before applying for a passport, your application will be delayed or denied.
If you have seriously delinquent tax debt and have already applied for a new U.S. passport, we cannot issue a new passport to you until you have resolved your tax issues with the Internal Revenue Service (IRS).
For more information on seriously delinquent tax debt, see Revocation or Denial of Passport in Case of Certain Unpaid Taxes on the Internal Revenue Service (IRS) website.
So, where in the legislation and regulations does all this come from?
Denial: Denial is mandatory when one applies for renewal or for a new passport.
https://www.law.cornell.edu/cfr/text/22/51.60
§ 51.60 Denial and restriction of passports.
(a) The Department may not issue a passport, except a passport for direct return to the United States, in any case in which the Department determines or is informed by competent authority that:(3) The applicant is certified by the Secretary of the Treasury as having a seriously delinquent tax debt as described in 26 U.S.C. 7345.
Revocation: Revocation is permitted but is not mandatory
https://www.law.cornell.edu/cfr/text/22/51.62
§ 51.62 Revocation or limitation of passports.
(a) The Department may revoke or limit a passport when(1) The bearer of the passport may be denied a passport under 22 CFR 51.60 or 51.61; or 51.28; or any other provision contained in this part; or,
It is not clear when the State Department would revoke an existing passport. I am not sure what incentive the State Department has to revoke an existing passport (just because of a tax debt).
My thoughts on this …
1. The $50,000 “tax debt” includes interest and penalties. It’s easy for an American abroad to exceed this simply through “form transgressions”.
2. The people most threatened by this are those who do not have a second passport. Get yourself a second passport.
The days of living as a U.S. citizen outside the United States are clearly numbered.
Interested in learning about Substitute Tax Returns for non-filers? If this is not enough excitement, see …
Considering renouncing US citizenship? "Passport Revocation Update: Over 436,000 Taxpayers Meet "Certification" Criteria" https://t.co/LDoHw0iAAV via @VLJeker
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) October 2, 2018
@plaxy
“It is not a question of visa expiration.”
For the group I referred to, it is.”
Not in regards to losing their passport.
“”It is a question of losing whatever visa one may have due to the loss of the US passport.”
For the group I referred to (those with neither PR status nor citizenship status), there’s always the deadline of the expiration date, plus whatever specific conditions attach to their visa.”
Yep, and not at all connected to losing a US passport and known to all who have even obtained a visa to enter another country.
“You, yourself, may be concerned only about keeping your US passport; but I wasn’t referring to you.”
I have many concerns, but funny thing, the price of tea in China is not to be found in the title of the thread, “Passport Revocation: The new weapon in the US war on Americans abroad”. Oh, looky there, nor are any other visa issues there found.
“the mere expiration of a non PR visa is troublesome but is just as relevant to the discussion if passport loss as the price of tea in China.”
In theory the discussion is supposed to be about US tax laws and IRS/DoS regulations, not the conditions attached to your Japanese visa and what might happen to you, Japan T, if this or that unlikely disaster were to befall you.
Nope, the discussion is “Passport Revocation: The new weapon in the US war on Americans abroad”. The effects of this weapon upon any and all of us are very relevant to the discussion. The fact of losing the ability to remain in country whn a visa expires is not.
“not at all relevant to the discussion on the risks of losing a US passport to those living abroad”
Probably feels pretty relevant to those I was referring to, since loss of their US passport could leave them up the creek with very few paddles at the end of their visa.
@plaxy
If the discussion is “is supposed to be about US tax laws and IRS/DoS regulation”, then why do you keep bringing up non US laws that have nothing to with “IUS tax laws and IRS/DoS regulation”?
“If the discussion is “is supposed to be about US tax laws and IRS/DoS regulation”, then why do you keep bringing up non US laws that have nothing to with “IUS tax laws and IRS/DoS regulation”?
Terrible, isn’t it. No sense of discipline at all. 🙂
““not at all relevant to the discussion on the risks of losing a US passport to those living abroad”
Probably feels pretty relevant to those I was referring to, since loss of their US passport could leave them up the creek with very few paddles at the end of their visa.”
No, most likely they are up the creek as soon as the passport is lost, same as those with a PR visa. Both groups are in the same boat, in regards to losing their US passport.
Loss of passport = lose of visa. Notice I did not type which type of visa because the type matters not. Any visa is cancelled upon the loss of a passport. Same for all.
If this was going on while I held a spousal visa and I had my passport pulled and I was stopped by a beat cop and asked for my papers, off I’d go to jail until deportation.
Now that I have a PR visa if I have my passport pulled and I am stopped by a beat cop and asked for my papers, off I’d go to jail until deportation.
Same, except for the visa.
Seems the same in Australia and at least several of the EU countries too.
@plaxy
Someone wanting to learn about “Passport Revocation: The new weapon in the US war on Americans abroad” reading your statement ““I’d say any individual living in a country where he or she has neither PR status nor citizen status has good reason to be concerned about their future in that country.” would get the misunderstanding that having a PR visa somehow shields them from this new weapon. A misunderstanding that you seem to have yourself.
A PR visa does not shield the holder from this new weapon. To think otherwise is dangerous. To spread or allow this misunderstanding to spread is wrong.
“No, most likely they are up the creek as soon as the passport is lost, same as those with a PR visa.”
I expect most non-US-resident USCs without PR/citizenship status in their country of residence take the necessary steps to keep their US passport constantly valid, since it’s their only document for traveling outside the residence country. It would be daft to do otherwise.
“A PR visa does not shield the holder from this new weapon. To think otherwise is dangerous. To spread or allow this misunderstanding to spread is wrong.”
No worries. If anyone actually reads through the whole of the long, meandering, drifting off-topic sub-thread and gets the impression that US passport revocation provisions are not a threat to law-abiding expats, that will be a good outcome, as far as I’m concerned. 🙂
When the US revoked Bobby Fischer’s passport (without telling him despite knowing his address), Japan didn’t arrest him immediately, but they arrested him when he went through pre-departure immigration inspection when he thought he was going to travel abroad. The reason for the passport revocation wasn’t tax but I bet the Japanese government didn’t care what the reason for revocation was.
Iceland gave Bobby Fischer asylum. I bet Iceland wouldn’t give Japan T asylum because he’s not famous enough, despite being equally deserving. But let’s suppose they did. If they gave Japan T an Icelandic passport he could remain in Japan as a permanent residence, but if they gave him asylum without a passport he’d have to move to Iceland.
I’ve read that Canada now allows PRs to remain in Canada even if they no longer have a passport. It didn’t used to be that way. When I lived in Canada as a PR it was the same as Japan is now.
@plaxy
“No worries. If anyone actually reads through the whole of the long, meandering, drifting off-topic sub-thread and gets the impression that US passport revocation provisions are not a threat to law-abiding expats, that will be a good outcome, as far as I’m concerned.
“I’ve read that Canada now allows PRs to remain in Canada even if they no longer have a passport. It didn’t used to be that way. When I lived in Canada as a PR it was the same as Japan is now.”
There’s one that does, any others?
Japan does not. Australia does not.
@ND
Do you know under what circumstances a PR visa holder can remain in Canada with a passport? Does Canada provide some kind of travel document to allow such persons to travel abroad and return to Canada?
@plaxy
“No worries. If anyone actually reads through the whole of the long, meandering, drifting off-topic sub-thread and gets the impression that US passport revocation provisions are not a threat to law-abiding expats, that will be a good outcome, as far as I’m concerned.
Then you are doing a disservice.
Japan T:
Exactly.
See http://isaacbrocksociety.ca/2018/10/03/passport-revocation-the-new-weapon-in-the-us-war-on-americans-abroad/comment-page-6/#comment-8417140
The tax industry is trying hard to big up the revocation provisions as a threat to non-filing US citizens, but nobody’s actually getting threatened with a deadly brown misdirected envelope other than those who have been assessed and certified as owing >$50K in US taxes.
From law360.com:
“The tax industry is trying hard to big up the revocation provisions as a threat to non-filing US citizens, but nobody’s actually getting threatened with a deadly brown misdirected envelope other than those who have been assessed and certified as owing >$50K in US taxes.”
OK, how the F do they know for fact positive that there are ZERO, NONE, NADA innocent folk whom have had their IDs stolen?
Blanket statements, plaxy, blanket statements. As long as such mistatements are allowed to stand the less likely corrections with be made in time to prevent innocent people form being completely destroyed.
Back to your perfect court case, let’s say in ends in favor of the person who lost their passport, then what? They just get their PR visa back and step back into their life abroad? You’re daft if you think so.
Eveything you say is as if in a vaccuum, as if there are no other realities at play here.
“Back to your perfect court case,”
Eh? What court case?
Question: If you try to enter the USA on a foreign passport, which gives a US birthplace, and have no CLN on file (perhaps you consider yourself to have lost US citizenship anyway), how are you treated by US border officials?
(This was discussed on Brock before, but it was like, ten years ago.)
Discussed ad nauseum. Depends on the border guy. The vast majorly of the time precisely nothing happens. The last time for us, the guy was so bored he never said a word. He merely gave a wave of his hand. Very rarely, the guy will say. (helpfully). Don’t you know you could still be American? -assuming that everyone wants to be American
Even more rarey he will say ( in a threatening manner). You are still American and should get a US passport. Almost never will our hypothetical traveller be turned away.
Passport revocation is meant to keep US resident tax delinquents from leaving
Yes, the passport question is discussed quite frequently.
Entry from Canada (by land or air) is generally very easy, once in a great while the border person notices and gives you a lecture, but the ramped-up enforcement I was told to expect the one time mine was questioned, circa 2011, has never materialized.
I don’t know what the situation is coming from Mexico or by air from countries that require a visa or ESTA waiver.
Getting an Esta when you have US citizenship is not possible. You would need to lie on the online application form that you were not a US citizen. This is not something I would do lightly as not sure what the consequences would be if caught. Canada doesn’t need Esta so much easier. And in the old days when you filled out the paperwork on the plane, it was fairly easy. If noticed by a border guard, it was mainly a telling off to get a passport next time. I have an accidental UK American friend that can not go to the USA anymore because he refuses to get a passport. He has no desire to go anyway.
The problem for my UK accidental friend is the US place of birth otherwise it would not have been an issue. He did travel on a UK passport once to the USA before the Esta program and did get detained and questioned at border control and was told he must get a US passport next time. That was the last time he set foot in the USA.
But these days they do facial scanning. They’ll know if you entered the country on a US passport (if they were doing facial scanning back then) but are now entering on a foreign passport.
UK Rose, how do the border people know that your friend (the accidental) has not committed a relinquishing act?