Warning for U.S. Citizens

[goboatingnow]

Originally Posted by capn_billl

Since the IRS can seize your bank accounts, (even ones in foreign countries), the passport thing is redundant.



But Statists are going to State.

The US cannot arbitrary seize foreign assets or close or seize foreign accounts

The US has four means of international forfeiture

Bilateral Treaties
Multinational Agreements
Executive Agreements
Letters Rogatory

One of these processes must be followed. Some are time consuming and require applications to a foreign court.

[barnakiel]

I remember reading one recent US president owed quite a lot to the tax office. But I saw him travel abroad very recently. An interesting case of 1984 in 2021.

[redneckrob]

Originally Posted by goboatingnow

I personally think cancelling your passport outside of a court directed judgement is morally and ethically wrong and in effect is an attempt to limit your citizenship.

Tax evasion is typically punished by fines and or recourse to the court that’s the only route that’s acceptable.

It matter not if you will fully or or by simple negligence ended up as in a tax situation

I wonder what, specifically, you disagree with in my posts where I pointed out that this would only happen to those who willfully and for multiple years knowingly put an incorrect address on their tax return or wilfully fail to file a return?

[garyfdl]

Originally Posted by barnakiel

I remember reading one recent US president owed quite a lot to the tax office.

"Allegedly" owed...

One of the US tax 'problems' is: the wealthy can afford expensive accountants and lawyers to defend themselves from the IRS. As a result, the agency had (has?) an unspoken policy to go after the 'little fish' - people and businesses that are unable to afford a costly defense.

[redneckrob]

Originally Posted by garyfdl

"Allegedly" owed...

One of the US tax 'problems' is: the wealthy can afford expensive accountants and lawyers to defend themselves from the IRS. As a result, the agency had (has?) an unspoken policy to go after the 'little fish' - people and businesses that are unable to afford a costly defense.

Again, this thread is about people who somehow weren't aware they had an issue over several years because they somehow managed to ensure the IRS couldn't reach them by either failing to file returns or knowingly putting an incorrect address on their return. What does that have to do with this, completely unsupported by the way, accusation about "little fish"?

[goboatingnow]

Originally Posted by redneckrob

I wonder what, specifically, you disagree with in my posts where I pointed out that this would only happen to those who willfully and for multiple years knowingly put an incorrect address on their tax return or wilfully fail to file a return?

My point is a removal of passport should only happen by a court decision after fair process. Anything else smacks of totalitarianism .

[Dockhead]

Originally Posted by goboatingnow

I personally think cancelling your passport outside of a court directed judgement is morally and ethically wrong and in effect is an attempt to limit your citizenship.

Tax evasion is typically punished by fines and or recourse to the court that’s the only route that’s acceptable.

It matter not if you will fully or or by simple negligence ended up as in a tax situation

I didn't really intend to start a discussion on whether or not it's morally wrong for the state to cancel your passport. The intent of my post was practical and helpful.


That's a discussion which would never end. I tend to agree with your opinion here, but I do understand why they do it -- scofflaws who intentionally don't pay their taxes can make it really hard for the IRS to collect by staying out of the country. Cancelling their passports is one way to get their intention.


The problem, however, is that this is a blunt instrument which can catch people who get in that position through simple negligence.


We've had a number of people comment that, in effect, you have to be really stupid to miss a tax filing or miss a piece of mail whilst living abroad long term, therefore, who cares -- let those stupid people suffer whatever consequences. I guess we don't need to rehash that discussion, but I disagree.

[valhalla360]

Originally Posted by George DuBose

Also, I heard that US income tax was supposed to be "temporary" to cover the debt from the First World War.

You heard wrong.

The 16th amendment was adopted in 1913. With the 1st state ratifying it in 1909.

WWI didn't start until 1914 and the US didn't join until 1917.

[valhalla360]

Originally Posted by sailingabe41ds

If they cancel my passport...
does that mean they forgive the tax bill?

abe

If you have an alternative passport and never want to return to the USA...effectively yes...though the IRS will keep you on the books and even a lot of overseas banks won't want to deal with you.

[valhalla360]

Originally Posted by Dockhead

I had no idea -- thanks for the learning moment.

The only other country which does something like this, to my knowledge, is Russia -- where they will simply not let you out of the country, whether you're a Russian citizen or not, if you have delinquent debts of any kind confirmed by a court.

...................

There but for the grace of God -- I sometimes wake up in the middle of the night wondering if I forgot some filing or another, get up, go to my desk, check. I am very careful, but I have companies in several countries, pay taxes in several countries, file annual reports, tax filings, information filings, etc. etc. etc. ad nauseum - in several countries. I have good people helping me with all this, but ultimately you are responsible yourself for being sure every got filed properly and on time. It's really easy to make a mistake.

I know of at least 3 other countries that won't let you leave if you have outstanding debt within the country. No personal experience just friends/coworkers who have run afoul of it...usually for silly things.

As far as "but for the grade of God", there probably are the stray rare cases where people honestly tried to do the right thing. The vast majority got there thru inaction or willful ignorance.

A lot of hyperbole still in your post. Someone who makes a reasonable effort doesn't have much to worry about. Do your taxes and make sure the IRS has the right address.

[valhalla360]

Originally Posted by Grattaway

2. In some places in the world if your passport is cancelled your are stuffed - and I have a real life experience from being in Zimbabwe without a passport - there is no way out and in some countries they would put you in the clink so no I dont think passports should be able to be cancelled - tagged or flagged maybe which is what can happen here now where you cannot leave NZ if you have certain outstanding payments but use your credit card at the airport and problem solved

And in my case I went to the British embassy in Harare and 4 hour later had a British passport valid for 3 months - so God save the Queen and all that stuff - had a handwritten note inside it saying that it was issued to me as a commonwealth citizen

What countries "lock you up"?

Presuming you didn't participate in some sort of criminal activity...

Typical resposnse...as you experienced...is they send you to your embassy to sort it out.

In a worst case scenario, they put you on a plane and deport you home.

They aren't locking you up just because you have a passport issue.

[GordMay]

Originally Posted by valhalla360

You heard wrong.

The 16th amendment was adopted in 1913. With the 1st state ratifying it in 1909.

WWI didn't start until 1914 and the US didn't join until 1917.

Sixteenth Amendment to the Constitution of the United States
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.’

Passed by Congress July 2, 1909. Ratified February 3, 1913.

Interesting backgrounder/history of the 16TH Ammendment:
“... Yet in 1913, due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at the rate of only 1 percent of net income ...”
➥ https://www.ourdocuments.gov/doc.php?flash=false&doc=57

[Dockhead]

Originally Posted by redneckrob

I wonder what, specifically, you disagree with in my posts where I pointed out that this would only happen to those who willfully and for multiple years knowingly put an incorrect address on their tax return or wilfully fail to file a return?

This is incorrect. Where do you get necessary "wilfulness" and "knowingly"? People move around, particularly cruisers. Long term expatriates who don't get ANY physical mail from the States, are TYPICALLY unable to receive physical mail reliably. A cruiser, for example, is overwintering in Italy, is registered in X marina, leaves in the Spring for France. Honestly puts the Italian marina address. Never expects to get any mail. Rinse and repeat. Nor does every long term expat even have access to a reliable address for physical mail.

Some of these posts remind me of the threads we occasionally get where something bad happens to someone; some emergency at sea and the boat is abandoned, and people pile on, motivated by some strange psychological urge I guess, eager to prove what idiots the victims were, how they need not have abandoned the boat if they had only done x, y and z, heaping scorn, and always implying -- could never happen to me. It reveals something ugly in the soul.

Have a heart. There are a lot of ways to run afoul of the very complicated filing requirements, without being a wilful scofflaw or an idiot.

An old friend of mine is a university professor at a university in the Baltic states. Like me, has not lived in the States for 30+ years. Estonian wife and kids and soon grandkids. Highly intelligent person; well known in his field. Not much of a head for business or bureaucracy, and that doesn't make him an idiot. Totally law abiding and of course always pays all of his taxes. Not wealthy so does his own taxes, files his own returns.

Well, on one visit with him I found out that he had never heard of the FBAR filing requirements. Never heard of it; didn't know it existed. So he was delinquent on those for what -- 6, 7 years? I explained to him the gravity of it and helped him fill them out and file them.

If he had read the instructions more carefully, might he not have discovered the FBAR filing requirement? Yes, of course -- certainly there was negligence there. But it's not as easy as you think to find this, if no one has told you, and you don't read thousands of pages of IRS publications for fun. If you're totally uninterested in money and never read anything financial.

The penalty for failing to make a FBAR filing is $10 000 per occurence, and $50 000 for even one occurence, if it goes on for several years.

So my friend is one example of a person -- with zero wilfulness, zero intentionalness, with only absent-minded negligence -- could have gotten his passport revoked. Would he have received mailed notices of demand to pay? Perhaps, but also perhaps not. He travels a lot, spends a semester or a year in another country, often really remote countries where there is really no physical mail, often.

There are many other examples. The only purpose of this thread is to give a heads up to anyone who might be in a similar situation. The scorn heaped on people who might benefit from such a warning, is unattractive.


And anyway, why are people who are so brilliant, that such a thing could never happen to them, even reading this thread?

[drcot3]

I had my & the dogs passport stolen, got the dogs inside three weeks, mine took 3 months for a replacement, but the british consulate could issue a numbered document which would have worked as my passport to enter my United Kingdom. I was in Spain and the rules re must show passport to hotel for registration was always allowed once I explained I had no passport, rules are to be broken when it suits, its official dogsbodies that are the problem, Police/Guarda Civil had no problem after any checks/ no checks when booking in to a new port/marina maybe if you face fits/polite and you show due respect, there is no issues, unless political arguments like Gibraltar/Spain border flair up even though most of the time its not a problem, just a waiting time to enter/leave.

[Jamme]

Originally Posted by Dockhead

The penalty for failing to make a FBAR filing is $10 000 per occurence, and $50 000 for even one occurence, if it goes on for several years.
So my friend is one example of a person -- with zero wilfulness, zero intentionalness, with only absent-minded negligence -- could have gotten his passport revoked.

Per Gord’s link to the IRS source posted in the second response to this thread, FBAR penalties are expressly carved out from this rule: “Some tax debt isn't included in seriously delinquent tax debt such as the Report of Foreign Bank and Financial Account (FBAR) penalty and child support.”

Although I am an expat of another country’into’ the U.S., I am not a U.S. expat, so my opinion is clearly worth less than these few bytes on which it is stored; but to me, this sounds a sensationalist thread on a somewhat ‘old’ news (having the rule first been enacted in 2018).

If it had been a real problem, we would have perhaps heard it directly from U.S. expats posting here about their passport having been revoked / not renewed.