If You Owe, Owe, Owe You Can’t Go, Go, Go – IRS and Immigration Team Up on Delinquent U. S. Taxpayers
Under a law passed in December 2015, seriously delinquent U. S. taxpayers could find themselves without valid travel documents or find it difficult renew to their passport
Picture it, your passport is set to expire in 25 days and you need to renew it so you can travel for business or remain in Thailand on your current visa. You take your passport to the U. S. Embassy in Bangkok with completed application and money in hand. You submit everything required for renewal of your passport. Shortly thereafter you are informed that your application cannot be processed and will be held for 90 days. Why? Because you owe the Internal Revenue Service ( IRS). But wait, since when did the State Department become a tax collector? And anyway, how do they know? Isn’t my tax information private?
THINK IT CAN’T HAPPEN?
Under a new law passed in December 2015, the Fixing America’s Surface Transportation Act, or “FAST Act,” it certainly can. Even though this law was enacted to provide for transportation financing, there is a very special surprise for the uninformed hiding within. Under provisions of the law, the State Department is empowered to hold up any application for passport renewal received from any individual owing taxes of over USD 50,000 ( including penalties and interest). The State Department is also permitted to cancel the passports of individuals owing such amounts as well. As a result, these “seriously delinquent” taxpayers could find themselves stranded abroad without a currently valid passport. This could cause significant headaches for Americans living here in Thailand as living in the Kingdom without a valid passport or visa is potentially illegal and could result in deportation.
BUT HOW CAN THEY KNOW?
Invariably there will be those individuals who will ask, “How will the State Department know if I owe money to the IRS? Aren’t my tax records private and sepa- rately held by the IRS?” While historically this was a valid claim, the FAST Act specifically requires that the IRS certify to the State Department the identity of anyone owning more than USD 50,000 in back taxes. This certification process was slated to begin earlier this year but a review of the IRS website announcing these new shows that as of the date of writing, they have not yet begun to provide the list of certified significantly delinquent tax payers.
Thus, it is advisable that any individual who owes significant taxes to the IRS should make arrangements to settle any outstanding amounts via immediate payment or through the negotiation of a payment plan prior to the first certifications or shortly thereafter to avoid delays in processing of any renewal application or worse, notification of pending cancellation.