How you can resist funding the government → about the IRS and U.S. tax law/policy → how is tax law/policy/administration changing? → legislation → 2015 transportation bill

Some news of interest to tax resisters in the U.S.:

• The on-again/off-again boondoggle of the federal government contracting out to private debt collection agencies to pursue people behind on their taxes is apparently back on again. By including the program in a new transportation bill, its proponents could use the income they hope to see from the program to offset other spending. It would probably be more efficient for the government just to hire more IRS agents to go after the money, but there are few things a Republican Congress would be less likely to do than give the IRS more money to increase the ranks of the National Treasury Employees Union.
  • My guess is that these private debt collectors are going to have a hell of a time. Since the last time this sort of plan was floated, a massive, years-long, ongoing, coast-to-coast scam has been in progress in which callers impersonating tax collectors have been getting victims to pony up money. News reports follow in the wake of the heists, all saying that if someone calls you up about a supposed tax debt, it’s a scam. The private agencies are gonna have a hell of a time distinguishing themselves from the scammers.
  • If the program is like the last one (and I haven’t seen the details yet, so I’m not sure), the agencies will be able to keep 25% of what they collect for themselves. It’s small consolation, but some consolation, to know that at least some of the money won’t be going directly to the government.
  • Also, if it’s anything like last time, “Private collection agencies cannot take any type of enforcement action against you to collect this debt (such as filing a Federal Tax Lien or issuing a levy).” In other words, they’re less powerful than the IRS itself, so if you’re determined not to pay anyway, you should probably be glad if your case gets assigned to a private agency and it may be worth your while to drag things out with them rather than having the case reassigned back to the IRS.
• In more troubling news, another part of the same Transportation bill would revoke passports from people who are behind on their taxes by more than $50,000. I’ll probably hit the $50k mark in a couple of years, so I take this very personally.
  • The bill hasn’t become law just yet. They’re still ironing out the differences between the House and Senate versions. But both houses’ versions had both of these proposals, so they seem likely to survive (though it’s not unheard of for parts of legislation that are passed by each house to wind up on the cutting room floor regardless, whatever you may have heard on Schoolhouse Rock). Obama is expected to sign the bill into law either way.
  • One twist on this is that, for some Americans, you need a passport even to fly domestic. Yes, in the land of liberty.
  • When the final bill is passed and signed I’ll take another look and investigate what the process of passport denial/revocation might actually look like in practice. And I’ll of course post something here if my own passport gets yanked. I may even accept that as a challenge and see if I can row a boat to Cuba or wade across the Rio Grande.
• Erica Weiland reports back from the NWTRCC national gathering in Las Vegas.
• Vice profiles war tax resisting superlawyer J. Tony Serra.
• Virtually Yours, at disinformation considers the ramifications of the Hobby Lobby Supreme Court ruling on conscientious objectors to military taxation.
• BloombergBusiness notes that the IRS is shedding criminal investigation agents in heaps, and suggests this is a great time to be a tax cheat.

Obama signed the new transportation bill into law, along with the provisions of it that require the IRS to farm out some of its unworked inventory of tax arrears to private debt collection companies and that allow for the revocation or denial of passports to people with more than $50,000 in unpaid taxes.

Tax authority Kelly Phillips Erb has a good write-up on the ramifications of that second provision. And you can read the text of the law as-signed if so inclined.

In 2015 Congress told the State Department to deny passports to, and revoke passports from, people with large federal tax debts. But I have yet to hear about anyone actually having their passport revoked or denied because of this.

Here’s an update on the policy, from the Taxpayer Advocate Service’s 2017 Annual Report to Congress, that explains why:

In 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act, which requires the Department of State to deny an individual’s passport application and allows the Department of State to revoke or limit an individual’s passport if the IRS has certified the individual as having a seriously delinquent tax debt. Although the IRS does not plan to implement the passport certification program until early 2018, the proposed IRS procedures and policies raise concerns about how the program will harm taxpayers and infringe upon their rights. Currently, an estimated 270,000 taxpayers meet the criteria for a seriously delinquent tax debt and do not meet one of the statutory exceptions or discretionary exclusions to certification. The IRS expects to certify 2,700 taxpayers when it initially implements the program in early 2018, and continue with certifications throughout the year in phases based on taxpayer response rates. At this time, the IRS will not be sending recommendations or requests to the Department of State to revoke taxpayers’ passports; although, the Department of State will revoke passports in accordance with its longstanding procedures.

This suggests to me that if you have such a tax debt (defined as one in excess of $50,000 $51,000), you may want to file an expedited request to renew your passport as soon as possible. They may renew your passport before the IRS gets around to sending in your name, and may not get around to filing a revocation recommendation any time soon. If you wait, however, you may find it difficult to renew your passport when it expires.

The Taxpayer Advocate Service, by the way, is very critical of how the IRS is implementing the program. It concludes:

Taxpayers have a constitutional right to travel, and the IRS risks abridging this right by declining to adopt additional taxpayer protections, such as stand-alone pre-certification notices that provide taxpayers with the right to challenge the IRS’s position and be heard.

(That italicized phrase comes from the Taxpayer Bill of Rights which the IRS adopted as a sort of aspirational or public-relations document in lieu of adopting actual policies to protect taxpayer rights.)