Tourists don’t know where they’ve been, travelers don’t know where they’re going. – Paul Theroux
No matter what your area of practice, if international travel is a routine part of your professional or personal life, your passport is in trouble if you owe more than $50,000 to the federal government.
I know what you might be wondering:
How is a debt problem in any way related to passport revocation?
Well, federal legislation is being drafted and proposed to try to raise money for infrastructure and highway improvements. They reckon they can raise the funding by enforcing debt collection from travelers and those living abroad. It’s possible the legislators believe that if you have the money to travel and spend abroad, you can shell out in your home country.
The government is looking to raise $400 million over 10 years and, if you fit the criteria, they will expect you to pay your contribution. If you already owe the money, it doesn’t matter how they intend to use it. If you want to fight that, go ahead and vote in the next elections.
But it’s not just your average business person or tax dodger who should be worried. Expatriates are caught in a bit of a quagmire should this proposal eventually become a law. An advocacy group for U.S. expatriates, American Citizens Abroad, is urging Congress to consider other methods
“This provision creates a tax collection mechanism that is frankly far too draconian,” stated ACA executive director Marylouise Serrano. “This approach puts disproportionate pressure on the taxpayer and risks mistakes and unforeseeable consequences, which would be life-changing for the individual. It discriminates against Americans abroad who, unlike Americans living in the U.S., are overwhelmingly reliant upon their U.S. passports in their everyday lives.”
A recent CNN article approximates that about 8 million Americans live abroad.
“Their financial affairs are, typically, far more complex than their counterparts back home,” said Nigel Greene, of the deVere Group, in a statement. The CNN article discusses how the relatively new Foreign Account Tax Compliance Act (FATCA) — which requires other countries’ financial institutions to report back to the IRS on accounts held by U.S. taxpayers — may add to that complexity.
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With all that’s happening in the mainstream news media, you should not expect much coverage on this topic.
I agree with Greene: Get your financial affairs in order before the new year. That’s a little more than three weeks.
Perhaps if you have the money to travel, you should have some funds with which to repay the government. If the feds are willing to work out a payment plan to accommodate you, you should take them up on it. Don’t procrastinate — you don’t want to first handle this at a foreign airport or some overseas embassy. This isn’t a luxury. You’re still $50K in the red and you will have to claw your way back into the black.
Contact Brinen & Associates to discuss how your travels and debt could impact you or your business and about how we can assist you in an Offer in Compromise.