Adjuvancy Client Letter

The FAST Act pulled a Fast One?

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If you were a client of mine, you would have received a notice last December. Just when I was writing about the amazing fact that Congress finally passed a bill- a real authorization bill- for the Department of Transportation, one that funded bare-bones transportaton neds for five years, my notice informed clients that the bill included a slew of unrelated items. In particular, items that changed the way our taxes are computed, the way the IRS acts, etc.

Adjuvancy Client Letter

One of those new provisions affects more than a few of my clients- and probably affects more than a few of you.

As part of the Highway Transporation Act (FAST Act 2015, HR 22, now PL114-94,), the US Congress has authorized Customs (Homeland Security), the State Department, and the IRS (the Treasury Department) to collude (my words) and revoke passports for “seriously delinquent” taxpayers. That amount – which includes penalties and interest, not just taxes owed- is $ 50,000.

PL 114-94

While there are no final regulations I can share with you, you can expect them by the coming election. However, that doesn’t mean someone’s passport won’t be revoked in the interim; it just makes it less likely.

And, if you an American living abroad (basically defined as one who is overseas for at least 330 days), then your passport is critical for daily life- registering your child in school, starting a bank account, etc. And, if you are living abroad, it is entirely possible, you don’t receive IRS notices! (Hint: This is why we need a valid power of attorney on file; we always receive the notices and can keep you informed.)

Because you see, if the IRS decides you owe $ 20,000 in taxes because they disagree with your interpretation of a regulation from three years ago, you could easily approach that $ 50K serious delinquency. (There’s failure to file penalties, failure to pay penalties, interest, etc.)

Again, since regulations have not been promulgated, it is not clear if you have a collection agreement with the IRS- and you miss ONE payment- have an installment agreement in place, or an offer in compromise, that you will be absolved from this requirement. Because previous versions of the bill did render these exceptions to passport revocation. Not so in the bill that passed.

Moreover, there already exists “customs holds” by the Department of Homeland Security. If the Treasury Department (TECS- Treasury Enforcement Communication System) lists a taxpayer as delinquent, any shipment into or out of the US made by the taxpayer is stopped. (By the way, this was considered the most effective enforcement tool for delinquent international taxpayers. Because it affects their assets. Consider this the Federal equivalent of those cars, trucks, cash that states seize if the driver was committing a crime while in possession [often illegally in possession] of said items.)

And, if you are foreign national who has been in the US for 182 days in a given calendar year or 122 days (on average) over three years- you had better have filed your 1040NR. Because the IRS may consider your bill seriously delinquent, too- and you can be seized at the border!

Now, I wonder if the failure to pay the PPACA (Obamacare) penalties will be included in this calculation?

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