Pulling Passports of Tax Offenders
According to a recent GAO report, as few as 224,000 passport holders owe as much as $5.8 billion dollars in unpaid taxes.
Although they don't bother paying taxes, they can afford to live well and travel.
- GAO judgmentally selected 25 passport recipients to investigate for abuse related to the federal tax system or criminal activity. Of these cases, at least 10 passport recipients had been indicted or convicted of federal laws. In addition, IRS assessed trust fund recovery penalties on several passport recipients when the individual did not remit payroll taxes to the federal government. Rather than fulfill their role as trustees of this money and forward it to IRS, they diverted the money for other purposes. Willful failure to remit payroll taxes is a felony under U.S. law. Some of these individuals accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes.
$5.8 billion is less than 2% of the purported $330 billion tax gap - but it would go a long way to help cover some important budget shortfalls, if the money were used properly with long-term vision (education, small business development).
Look at your own client base. How would your clients be affected if the State Department suddenly had the right to restrict travel privileges of Americans who are, essentially, tax criminals.
Would you advise them differently?
Do they even follow your advice?
Do you thnk pulling passports is the next, dangerous step to cutting of rights of citizens?
Or is this a sensible way to force collection of taxes?
Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.