Tax

Unpaid Tax Debts Stop 362,000 Americans Getting Passports - Report

Tom Burroughes, Group Editor, July 9, 2018

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New powers that kicked in at the start of this year mean hundreds of thousands of US persons aren't allowed to get or renew a possport unless they resolve tax debts.

More than a third of a million US persons with unpaid taxes will be denied new or renewed passports if they don't settle these debts, the Internal Revenue Service has reportedly said.

Some 362,000 Americans will be affected if debts aren't paid, the Wall Street Journal reported late last week.

A law enacted by Congress in late 2015 gives the IRS and State Department the right to deny passports or revoke them for taxpayers with more than $51,000 in overdue tax debt. The system began to be enforced in February this year.

Such a measure adds to the FATCA legislation designed to crack down, its framers say, on expat US persons and Green Card holders suspected of evading US tax. The act has been blamed for making it difficult for US persons to open a bank account outside the US. Increasingly onerous rules have also, critics say, make it tough for millions of expats to access financial services, which ultimately damages American business.

The WSJ quoted an IRS spokesperson as saying that the 362,000 people are current tax debtors who are affected by the law. The IRS is sending their names in batches to the State Department, a process the tax agency aims to finish by year’s end.

The State Department said it has already refused passports to some debtors.

It is unclear at this point whether such powers to deny travel to indebted taxpayers is constitutional or not. Organizations such as American Citizens Abroad, a membership and lobby group, have criticized the legislation creating these powers.

 

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