Tucked into the highway bill congress">Congress recently passed was a provision that, on the surface, looks like a sensible way to prevent tax cheats from skipping the country. But giving the State Department and the IRS the power to seize your passport for unpaid taxes raises a host of concerns about basic constitutional rights:
The State Department could revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt in an amount in excess of $50,000. It is supposed to be a little like having outstanding parking tickets. You might have to pay them to be able to register your car or renew your driver’s license. But critics say the right to travel is fundamental and constitutional.
This time, it is expected to pass as part of the pending highway bill. It means in January of 2016, the State Department will start blocking Americans with ‘seriously delinquent’ tax debts. Administrative details about how all this will work are scant. But in all likelihood, it will mean no new passport and no renewal. It could even mean the State Department will rescind existing passports of people who fall into that category.
The list of affected taxpayers will be compiled by the IRS. The IRS will use a threshold of $50,000 of unpaid federal taxes. But this $50,000 figure includes penalties and interest. And as everyone knows, interest and penalties can add up fast. Notably, if you are contesting a proposed tax bill administratively with the IRS or in court, that should not count. That is not yet a tax debt.
We're not opposed to going after those who intentionally, and criminally, avoid paying taxes.
But denying freedom of movement? The great minds in Congress may have gone too far:
Is it constitutional? The right to travel is established, both between states and internationally. And although some restrictions have been upheld, it is not clear that this measure would pass the constitutional test. Consider especially the roughly eight million Americans living overseas, many of whom are already reeling from FATCA compliance problems.
Congress just wants the money, and the worthies estimate they can rake in nearly $400 million over the next 10 years from this new law (if it holds up in court).