270 thoughts on “Passport Revocation: The new weapon in the US war on Americans abroad”

1. Morning Mr. T. The Japanese phrase “ohayou gozaimasu” is right on target, it’s early, and there’s nothing good about it.

   http://procedurallytaxing.com/notes-from-last-weeks-aba-tax-section-meeting-in-atlanta/

   “As of August 31, 2018, 272,656 taxpayers have been certified by the IRS to the State Department. Of those taxpayers, slightly over 17,000 have been decertified or reversed.

   A taxpayer cannot just pay the debt under $51,000 and have the passport revocation lifted. Once a taxpayer is selected and referred, full payment must be made to have the IRS decertify the debt.

   “Chief Counsel takes the position that: 1) a taxpayer cannot raise the merits of the underlying liability in the passport revocation case;”

   Will that be the end of liens and levies? After assessing enough penalties against a taxpayer who doesn’t owe any tax, instead of issuing a notice of lien or intent to levy where the IRS might concede 100% of the penalties after calendar call in Tax Court, just revoke the passport so the penalties don’t have to be conceded.

   I’ve spoken with someone who’s afraid he won’t qualify for Japanese citizenship, who fears he won’t be able to renew his US passport and will be deported. He expects to lose his family. Other people accused him of exaggerating. It looks like Chief Counsel doesn’t accuse him of exaggerating.

   “3) the scope of review is the administrative record;”

   Usually in order to prove how inaccurate the administrative record is, don’t you need to have two separate cases with two separate administrative records?

   “Comments from DOJ, Tax Division

   It is focusing on three matters this year:

   – Offshore
   […]”

   Exactly. There’s no limit to the number of penalties the IRS can trump up against people who can’t afford to fight.

2. @ND

   Ohaiyo gozaimasu.

   Running on just 4 hours of sleep, brain not firing on al cylinders. What does ““Chief Counsel takes the position that: 1) a taxpayer cannot raise the merits of the underlying liability in the passport revocation case;”” mean?

   Sorry, just not able to wrap my mind around aything yet, need two more cups of coffee before I can even make the attempt. In other words, what is the gist of your post. Ssems important but the fog, in my head, is too think.

   T

3. The law on Collection Due Process Hearings says that if the victim didn’t receive any Notice of Deficiency then the victim is allowed to contest the underlying liability (the accusation that taxes and penalties are owing). This isn’t available to someone who did receive a Notice of Deficiency because the victim had an opportunity to contest the underlying liability in a deficiency hearing.

   The IRS told me that they didn’t issue a Notice of Deficiency to me, but the IRS still didn’t allow me to contest the underlying liability in a CDP hearing. The Tax Court judge should have thrown the IRS out on its ear, but didn’t because I was pro se because a Low Income Tax Clinic refused to help in a collection case. Also the yen was sky high at the time so I might have been over the limit on income to qualify for LITC assistance. Later I figured out the LITC probably assumed I had ignored a Notice of Deficiency, but I didn’t guess that at the time they refused to help me. (Meanwhile, later the IRS said they did issue a Notice of Deficiency. But later later, they reverted to saying they didn’t issue one. This is now the subject of a petition in US Supreme Court, which of course they will refuse to hear — but Supreme Court publicly posted a list of financial institutions where I have accounts, so now we need more defences against identity thieves.)

   The law on passport revocation doesn’t say that if the victim didn’t receive any Notice of Deficiency then they can contest the underlying deficiency. The IRS’s Chief Counsel now confirms that the 5th Amendment right to due process is even deader than it was already.

4. @ND

   Thank you, and I mean that, for this informtion. We need as much we can get.

   However, with the coffee just kicking in, I am still not able to understand the following,

   “I’ve spoken with someone who’s afraid he won’t qualify for Japanese citizenship, who fears he won’t be able to renew his US passport and will be deported. He expects to lose his family. Other people accused him of exaggerating. It looks like Chief Counsel doesn’t accuse him of exaggerating.”

   Please put it in as simple terms as you, so that even a monkey can understand, as the Japanese say. I am dead tired.

5. “I’ve spoken with someone who’s afraid he won’t qualify for Japanese citizenship, who fears he won’t be able to renew his US passport and will be deported. He expects to lose his family.”

   I think you know who that is. Maybe I should have edited the copy of my comment that Procedurally Taxing might post tomorrow since they’ve been accepting my comments recently.

   “Other people accused him of exaggerating.”

   I think you know who they are.

   “It looks like Chief Counsel doesn’t accuse him of exaggerating.”

   The IRS’s Chief Counsel expressed positions that they will do exactly what you’ve been afraid they’ll do.

6. @ND

   Thank you. It was that last sentence I was unclear about. Yes, even in my stupor, I was ble to discern who the first two statements were about.

   Now, in my stupor, I am unable to glean where the IRS’s Chief Counsel agrees with me.

7. @ND

   I wouldn’t ask if you had not already done the work and I were not dead tired with nor prosect of a rest for many weeks to come.

   Where did tge IRS’s Chief Counsel express positions that they will do exactly what I’ve been afraid they’ll do?

   Also,this would be of great concern to others in my position.

8. Repeating some of my earlier quotations:

   “Chief Counsel takes the position that: 1) a taxpayer cannot raise the merits of the underlying liability in the passport revocation case;”

   “Comments from DOJ, Tax Division

   It is focusing on three matters this year:

   – Offshore
   […]”

9. I’m sorry ND, but I am the walking dead today.

   I simply do not understand point 1). What does “raise the merits of” mean?

10. ‘ What does “raise the merits of” mean?’

    It means arguing whether the assessed penalties (or tax if it was tax) are justified or not.

11. Thanks ND.

    F F F F F!

    Not at you ND.

    Lot, LOTS Fing LOTS of innicent people are going to lose everything and without any recourse.

    Just a matter if time. Especially as anyone who tries to infirm others are labled bad names for their efforts.

    T

12. Plaxy and Nononymous,

    I’s LOVE to hear you take on this.

13. I couldn’t actually follow the discussion. My take is, don’t live in a country where you can’t get citizenship if you only have a US passport and plan to owe the US government a lot of money. Whether you meet that last criteria is a bit of an unknown – time will tell.

14. @nononymous

    What an asinine statement.

15. I haven’t read all the comments so I apologize in advance if someone already mentioned this;

    Passport revoc. is fine and dandy, I suppose, as a weapon for those who have one but what does our splendid and wondrous US government propose to do against green card holders, for example? Aren’t those poor unfortunate bastards also subject to FATCA as “US persons”?… and if they have their green cards revoked won’t they then be automatically freed from their CBT tax obligations?

    If I’m asking a stupid question then so be it, I don’t care. I will confess that I have been thoroughly confused for the last eight years.

    The American tax system is straight out of Hell and it’s run by mad men ever since.

    p.s. Thanks Obama and the democrats for this oppression. How can I say this? We are forever in your debt.

16. @Eric

    The green card situation is bizarre. If you stay out too long (more than one year?) you can lose your green card from an immigration standpoint (i.e. not be able to return) but if you didn’t file the I-407 form to give it up, you’re still considered tax resident by the IRS. There are other complications too, stay in the US longer than 8 years on a green card and you face exit tax consequences when you leave. That craziness pre-dates FATCA, as far as I know, so we can’t blame Obama for it.

    Regarding FATCA, a green card holder who didn’t file the I-407 upon leaving is still technically a US person, subject to US tax filing and FBAR requirements, and subject to FATCA reporting. However, by definition they will not have a US birthplace or US passport. So they’d need to be some combination of blindingly naive, deeply stupid and self-destructively honest to tell their bank that they are a US person. (On that note, my parents were doing some review of account info with their investment broker and for some reason they were asked about the time they lived in the US half a century ago and my mother, bless her, dug through a drawer, found a piece of paper and said “oh look I still have my green card”. This caused the shit to hit the fan. I wrote a letter for them to send to the bank claiming that the thing had been given up properly, all tax matters settled, not a US persons, etc. and that seemed to work.)

    As for consequences of not filing etc. after leaving I don’t really know, it’s not something I’ve had to worry about, and likely not an issue unless there are US assets or Social Security payments at risk. I think it’s fairly common for green card holders to depart and do nothing and simply stop filing.

17. @JapanT

    You knew what I was going to say when you asked, so don’t act offended.

18. Nononymous:

    “you can lose your green card from an immigration standpoint (i.e. not be able to return) but if you didn’t file the I-407 form to give it up, you’re still considered tax resident by the IRS.”

    Analogous to the theoretical situation of a renunciant who doesn’t file 8854? In theory the former citizen and the former green card holder are still US-tax-resident even though neither has residence rights and neither can be forced to play US tax games.

    It makes no sense from a revenue perspective, nor as a vengeful “weapon in a war against expats”, but might not look so crazy from a perspective of preventing the person who has lost residence rights from trying to sneak back into America and live there without paying tax. Maybe.

    Purely speculative.

19. Thanks Nononymous,
    I recall reading on this site a few years back a letter from, if I remember correctly, a guy in Serbia that was a green card holder and was having troubles with his bank at home. His English was not very good but he managed to express his frustration and confusion at being hounded three years after he left the states.

    I’m a fair minded man but Obama can go to hell; pre-Fatca and post Fatca, along with the the US bankers who likely thought of Fatca in the first place and paid the dems to sneak it through.

20. I think the green card situation becomes problematic for those who leave behind assets: various types of tax-protected retirement savings or perhaps a house that they’ve kept as a rental property rather than sold. But it’s not something I’ve ever needed to educate myself about, so know very little.

    I don’t recall the guy from Serbia but I imagine that if a bank knew that he had spent time working in the US, they could be extra vigilant and ask difficult questions. (Was he planning to wire over a bunch of money still in the US, for example.) Whereas someone forewarned could simply pretend they were never there and say nothing.

21. Interesting. They presumably must have used the Green Card regulations as a model for the rich-renouncer regulations.

    A Green Card holder can file a 1040NR to claim US tax breaks, am I right?

22. I said:

    “It makes no sense from a revenue perspective, nor as a vengeful “weapon in a war against expats”, but might not look so crazy from a perspective of preventing the person who has lost residence rights from trying to sneak back into America and live there without paying tax. ”

    Or as a way to prevent the former citizen/GC-holder from filing US tax forms – e.g. to claim tax credits?

23. Who knows? In an effort to keep this hobby under control, I haven’t dug too deeply into the green card business, other than saving my mother from herself a few years ago.

24. Yes!

    An individual shall cease to be treated as a lawful permanent resident of the United States if such individual commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country, does not waive the benefits of such treaty applicable to residents of the foreign country, and notifies the Secretary of the commencement of such treatment.

    Quoted by Hodgen at https://hodgen.com/complete-form-part-1-8854/

    So the 8854 and the “checking out of US taxation” business seems to be about not being able to claim US tax breaks on US-source income while claiming treaty tax breaks on non-US income.

    And at that point the exit tax applies, insofar as the former PR/citizen plays ball.

25. Nononymous:

    “…other than saving my mother from herself a few years ago.”

    Lol. George George Morrison Morrison…