Terry Ritchie tweeted this earlier today. It tends to confirm fears about information sharing between agencies and how it may complicate things at the border. It would appear this exchange will happen only if an actual tax lien has been filed; I would suspect this won’t apply to the majority of us.
The IRS has established procedures to facilitate tax collection from taxpayers who live outside the United States. If a taxpayer has an unpaid tax liability and is subject to a resulting Notice of Federal Tax Lien, the IRS may submit identifying taxpayer information to the Treasury Enforcement Communications System (TECS), a database maintained by the Department of Homeland Security (DHS). The database allows the DHS to identify taxpayers with unpaid tax assessments who are traveling to the United States for business, employment, or personal reasons (Internal Revenue Manual (IRM) §18.104.22.168). As a result, taxpayers traveling to the United States with unpaid tax assessments increasingly are being detained at the border.
Again, the expectable swerve around any possible privacy issues:
Information reflected in a Notice of Federal Tax Lien, which may be entered onto TECS, includes the contact information for the individual and the amount of the unpaid tax. Taxpayer information may not be disclosed to TECS without a properly filed federal tax lien because Sec. 6103 protects taxpayers from improper disclosures of their tax return information. As a general rule, returns and tax return information are confidential and may not be disclosed to federal or state employees or agencies unless expressly allowed by statute.
Sec. 6103 does not specifically authorize the disclosure of return information that already is part of the public record. However, the U.S. Supreme Court ruled in a line of cases that there is no reasonable expectation of privacy for matters that are part of the public record. See Nixon v. Warner Communications, Inc., 435 U.S. 589 (1978); Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975); and Craig v. Harney, 331 U.S. 367 (1947). Consequently, the IRS takes the position that the disclosure of information taken from the public record is not an unauthorized disclosure under Sec. 6103. Under this position, information reflected in a properly filed Notice of Federal Tax Lien is part of the public record and may be submitted to TECS without violating the disclosure laws.
Observations by the editor, Annette Smith:
IRS disclosure of taxpayer return information to the DHS through TECS can have broad consequences. The IRS relies on the general proposition that taxpayer return information that is part of the public record is not subject to disclosure limitations. A withdrawal or release of the lien, and certain other prerequisites, are required for removal of the taxpayer’s information from TECS (IRM §22.214.171.124.5.4). Thus, the lengthy process to remove information from TECS may result in detention at the border for travelers to the United States for a period of time after the lien has been released or withdrawn.
A taxpayer who resides outside the United States may not be aware of outstanding federal tax liabilities if the address on record for the taxpayer is outdated or otherwise incorrect. Consequently, tax advisers with clients who reside outside the United States should ensure that the correct address for the taxpayer is used on the client’s returns and, if the client no longer is required to file U.S. returns, that the IRS still is able to contact the taxpayer about previously filed returns. Taxpayers should be advised that the failure to keep the IRS apprised of a change in mailing address may result in an unwelcome, and potentially embarrassing, surprise from the DHS when the taxpayer seeks to enter the United States through Immigration and Customs Enforcement.
Having just read swisspinoy’s post Day One: Filing Previous Year Tax Returns with all the confusion about addresses, I shudder to think of how likely it is, that information sharing between agencies will turn into a huge disaster.