IRS tries to cancel a quarter of a million passports

Monday, 15 October 2018
As of this August, the US Internal Revenue Service had started action to revoke the citizenship or residence rights of at least 260,000 US individuals, according to law firm Dickinson Wright.

The power to recommend passport revocation for serious tax defaulters was granted to the IRS under the Fixing America's Surface Transportation Act, signed into law in December 2015, but only brought into effect in February 2018. The Internal Revenue Service has stated it plans to use the power against US persons who owe more than USD51,000 in taxes and penalties.

The large number of revocation applications already made by the IRS is surprising. However, Dickinson Wright notes that there are a number of safeguards available to those affected.

First, the threat cannot be used unless the taxpayer has already received either a Notice of Federal Tax Lien or a Notice of Intent to Levy. Taxpayers receiving either notice are entitled to appeal to a Collection Due Process hearing, to negotiate a resolution of this debt.

Second, the IRS can apply for a passport revocation or denial only if it first notifies the taxpayer of its intention, and allows 30 days for a response. It can go ahead with the application only if this request is ignored or not satisfactorily answered.

Even then, the taxpayer can halt the revocation by agreeing to pay the tax in instalments, or by offering a compromise. And in the last resort, where revocation is granted, the State Department will not actually execute it until 90 days after the grant, giving the taxpayer time to resolve it, says Dickinson Wright.

Canadian law firm Moodys Gartner has also offered advice for US expats who are considering renouncing their US citizenship.


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