Friday, June 1, 2012

Global Impact: Expat Group Opposes US Bill That Would Permit Revocation of Passport of Americans Owing Back Taxes

Geneva-based US expatriate organization, American Citizens Abroad ( has communicated with Congress opposing a provision to a surface transportation bill that would authorize the US Department of the Treasury to initiate revocation of a US passport that would then be revoked by the US Department of State, for any taxpayer who has a federal tax liability of at least US$50,000.

The letter, sent to Senator Barbara Boxer (D-CA) and members of the surface transportation committee, emphasizes that the bill “discriminates against Americans abroad who, unlike Americans living in the US, are overwhelmingly reliant upon their US passports in their everyday lives.” The ACA's letter also points out that the filing process for Americans living abroad is much more complicated than for US residents, with the possibility for error in filings being greater.

COMMENT: The provision states that if the Internal Revenue Service (IRS) finds that an individual “has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport." 

The ACA's letter was also sent to the US Senate Finance Committee and the House Ways and Means Committee.

After clearing the Senate in a 74 – 22 majority vote on March 14, the bill has now been sent to the House of Representatives. If it passes there, it would likely be signed by President Obama and become law, where it would apply to some seven million Americans residing abroad.

If the legislation is enacted as currently written, it has been estimated that it would raise $743 million over ten years, which might well give Congress more of our money to waste on unnecessary projects.

Having lived abroad for many years, I am very empathetic with the ACA's position, but given the diminished federal tax collection by the IRS as a result of our lingering recession, expats are often perceived as "fat cats," which is not a factual statement.

As for the proposed legislation, there is no reference in it to an appellate process before revocation of a US passport. Consequently, an American living abroad could suddenly find himself/herself unable to travel because of inaccurate information or the IRS not being able to locate and/or communicate with a taxpayer regarding a tax liability.