Congress to U.S. Citizens: Pay Your Income Tax or Forfeit Your Passport

Congress to U.S. Citizens: Pay Your Income Tax or Forfeit Your Passport

By Mark Nestmann • April 10, 2012

One of the strongest enforcement mechanisms any government has over its citizens is to restrict their ability to travel internationally.

Since international travel to almost anywhere requires a passport, requiring citizens to adhere to specified rules to obtain this travel document is a highly effective mechanism of social control.

Many governments therefore temporarily or permanently suspend a citizen's passport under a variety of conditions, or refuse to issue or renew it at all. For instance, under U.S. law, several circumstances exist under which authorities can confiscate your passport, or the State Department can refuse to issue or renew it:

  • If a federal court has issued a warrant for your arrest
  • If a federal or state court has ordered you not to leave the United States
  • If another country has requested your extradition
  • If you owe more than $2,500 in delinquent child support payments

I’ve long predicted the U.S. government would eventually add  "lack of tax compliance" to this list. Now, the U.S. Senate has taken an important step in that direction. The 2012 highway funding bill (S. 1813) sets up a mechanism to deny or revoke your passport if you have a "seriously delinquent tax debt." This is defined as a tax debt that exceeds $50,000 for which the IRS has filed a notice of lien or levy. It remains to be seen if the House of Representatives will go along with the Senate proposal, but it seems highly unlikely that anyone in Congress--or President Obama--will object to forbidding a U.S. citizen who owes $50,000 or more in back taxes from traveling internationally.

Since federal law generally prohibits the IRS from disclosing taxpayer data to other federal agencies, S. 1813 makes an exception to this rule for purposes of disclosing "seriously delinquent tax debts" to the State Department. Once receiving this information, the State Department "may not issue a passport or passport card to any individual who has a seriously delinquent tax debt…." It must also "revoke a passport or passport card previously issued to" such persons.

Even if you don't fall into one of the categories under which the government can confiscate your passport, don't assume you can renew it when it expires. If the State Department requires you to complete its “biographical questionnaire” as a condition for renewal, you’ll be hard-pressed to come up with some of the requested information (e.g., for a male, your circumcision records).

If you're a U.S. citizen who values your right to travel internationally, S. 1813 makes it more important than ever to get a second passport. If you don’t qualify for a second passport by virtue of marriage or ancestry, it’s still possible to acquire one by making a contribution or investment to a handful of countries. In exchange, you’ll receive citizenship for life and a passport.

The Commonwealth of Dominica and the Federation of St. Kitts & Nevis are the only countries with an official, legally mandated, citizenship-through-investment program. Several other countries, including at least two EU members, will award citizenship and passport upon performance of an outstanding service (including an investment).

The Nestmann Group, Ltd. can assist you in lodging your application for citizenship and passport in these countries. Please contact us for more information.

Copyright © 2012 by Mark Nestmann

Protecting your assets (and yourself) against any threat - from the government, the IRS or a frivolous lawsuit - is something The Nestmann Group has helped more than 15,000 Americans do over the last 30 years.

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About The Author

Since 1990, Mark Nestmann has helped thousands of clients seeking wealth preservation and international tax planning solutions. He is the author of highly acclaimed Lifeboat Strategy and other books & reports dealing with these subjects.

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