U.S. lawmakers are meeting today (Wednesday) to discuss a bill that would include the ability to take away someone’s American passport if they owe tax.

The idea behind the passport revocation is to partly fund the proposed highway funding project.  According to the Senate Finance Committee, the move would raise around $400 million over 10 years – far less than other proposed initiatives.
The measure would allow the federal government to revoke a passport or deny an application for one, if the individual concerned has more than $50,000 of unpaid federal taxes that the IRS is seeking to collect.

U.S. expat group, Americans Citizens Abroad has recently written to Congressional leaders stating their opposition to the “far too draconian” provision.  In the 6 November letter, the organisation states: “[This measure] discriminates against Americans abroad who, unlike Americans living in the United States, are overwhelmingly reliant on their U.S. passports in their everyday lives.” The document adds that IRS’s power to assist taxpayers living and working abroad is increasingly limited due to the closure of some IRS offices overseas.

The passport provision would go into effect Jan. 1.

The proposal once again shows the growing and far-reaching steps that the U.S. authorities are prepared to take to “recover taxes.” Of course, this comes on the back of America’s highly controversial global tax law, FATCA, of which I am a well-known critic.

And it highlights once again how important it is for U.S. expats to seek professional independent financial advice from experts with cross border experience to get their financial affairs – which are normally more far complex than they counterparts ‘back home’– in order and compliant.

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