How you can resist funding the government →
about the IRS and U.S. tax law/policy →
how the government deals with tax resisters →
will tax resisters get hassled at the borders or when applying for passports?
Someone asked me recently whether American tax resisters ever got hassled by border officials when leaving or coming back into the country.
I told him that until recently I hadn’t heard of anything like this, and that as far as I knew the border folks typically only check for criminal matters, not things like tax liens and levies and such which are much more typical for the conscientious tax resister set.
The “until recently” bit was because of this article that showed up in the Canadian press earlier this month.
Apparently, the IRS is feeding its data to Homeland Security, which “may bar the traveller’s entry into the United States” if the traveller has “unpaid U.S. tax liabilities.”
The article concerns people with dual citizenship, or people without U.S. citizenship who nonetheless have tax liabilities or unmet tax filing requirements in the United States (in other words, not U.S. citizen residents).
Some bits and pieces from here and there:
Tax Day action reports are starting to trickle in.
This year, the TEA Party presence seemed way down, or at least the news media has gotten tired of covering it.
There were many reports of liberals engaged in various creative protests designed to shine some light on profitable corporations who somehow manage to rake in government subsidies and get away without paying taxes, and a couple of reports of anti-war activists trying to inform the public about the bloated military budget.
Some folks have taken to submitting an affidavit along with their tax returns declaring that they are only filing “under threat, duress and coercion… because I fear retaliation by the IRS… to avoid going to jail, not because I believe there’s a legitimate obligation; I am terrified of the IRS… and being attacked by them if I don’t comply with them.”
They hope to make explicit the threat of government violence that is largely implicit at tax time and to preempt silly people like Senate Majority Leader Harry Reid who insist we have a “voluntary” tax system.
Uncle Sam is floating some new ways of trying to make taxpaying “an offer you can’t refuse.”
canceling the passports of people who are behind on their taxes
making government employees’ retirement accounts leviable
forcing government employers to fire employees who are deliberately avoiding taxes
None of these proposals are law yet, but they’re being proposed in Congress, which means they probably have revenue estimates associated with them, which means if Congress is looking around for a way to pay for something else they want to do, they might add one of these proposals to their bill at a moment’s notice.
, the U.S. Senate approved a bill, largely concerned with “surface transportation” issues, that includes a provision that may alarm some tax resisters.
The bill would, as of , authorize the government to revoke or deny passports to people who owe more than $50,000 in back taxes.
It remains to be seen whether the House of Representatives will include this provision in their own version of the bill.
Some bits and pieces from here and there:
In , in a little-noticed case, Kawashima v. Holder, the U.S. Supreme Court ruled (6–3) that tax evasion — at least when it involves “fraudulent or deceitful conduct” and results in a loss of $10,000 or more to the government — is a crime that justifies the government deporting you even if you are an otherwise legal resident alien.
Congress passed and the president signed a long-anticipated transportation related bill.
The Senate version of the bill had been amended to give the government the authority to revoke passports from people who had not paid their taxes (once the delinquency reached a certain threshold).
The bill that passed does not include this amendment, as it did not survive the reconciliation process.
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You probably heard (a few times too many) that the Obamacare medical and health insurance industry legislation survived a Supreme Court challenge recently.
Bitching about Obamacare has become the cause célèbre of a large section of the conservative base this election year, and the usual pundits have been whipping up a froth of anger about it, and particularly about the “individual mandate” that people buy health insurance — a mandate that is enforced through an additional tax on uninsured people.
Most interesting, from the Picket Line parochial point of view anyway, is that this tax will just be a line-item on the annual federal income tax statement butthe law explicitly prohibits the IRS from using its ordinary tools of liens, levies, seizures, and penalties to enforce payment of this part of the tax.
I expect this will cause them some headaches and make them reluctant to pursue any cases at all against low-level tax refusers.
A number of people who are part of the anger froth have already declared boldly that they plan to refuse to pay the tax, though American conservatives have a pretty poor record of backing up threats of tax resistance with action.
Myself, I hope to remain insured, so I will probably not have the opportunity to resist this tax.
The Occupied Times featured an article on war tax resistance from The Reverend Nemu: Render Unto Caesar.
Prospects for big tax reform legislation are considered pretty slim, but it can be a good idea to keep track of which tax reform ideas are being taken seriously in Congress, as they sometimes get rolled into other bills as offsetting revenue-raisers or for other reasons, and they may also be part of some future tax reform bill or grand budget compromise.
, Max Baucus, chairman of the Senate Finance Committee, released his tax reform plan.
Among the elements that caught my eye:
“Banks must report the existence of bank accounts, including accounts on which no interest was earned, during the taxable year.”
This helps to confirm a suspicion held by some of us in the war tax resistance community who have noticed that the IRS seems less likely to levy non-interest-bearing accounts, as though it only notices those accounts that it receives 1099-INT reports about.
“The State Department is authorized to revoke passports of individuals with seriously delinquent tax debts in excess of $50,000.” I’ve seen proposals like this floated before that haven’t gone anywhere, but the writing is on the wall: this is definitely a mainstream proposition in the hells of Congress.
The proposal would require more people to file electronically.
For instance, if you have your income tax return done by a professional, that professional would be required to file your return electronically (you would no longer have the option of asking for a printout and filing the paper return).
Software that prints paper returns would have to print the data using a machine-readable barcode in addition to the human-legible form.
You could still file a paper return by filling it out long-hand in the old-school way (that’s what I do).
“The IRS is granted authority to use the Department of Health and Human Services’ National Directory of New Hires to verify employment data.”
Not sure if this might have ramifications for resisters who switch jobs to avoid salary levies.
The proposal calls for reviewing and revamping the system of tax penalties, but has no details about how (instead it requests comments).
Because some penalties aren’t indexed for inflation, usually review-and-revamp means “increase.”
The New York Times published an interesting piece on “Raising a Moral Child” that spotlights some of the current thinking on how children learn to become ethically engaged.
The summary is that it is important to praise and guide children with an eye to making them value their own characters and to understand how their behaviors form their characters.
Another data point that suggests the practical value of an Aristotle-style “virtue ethics” approach.
Those of us committed to fomenting tax resistance would be wise to keep our eyes on the research of those committed to encouraging tax compliance, as their conclusions often have mirror-images that will be useful to us.
The latest in this series is a paper by Richard Lavoie entitled Vox Clamantis in Deserto: The Role of the Individual in Forging a Strong Duty to the Tax System.
Excerpt:
Societies exhibiting high tax morale typically maintain stable levels of
high tax compliance over time (establishing a societal “taxpaying
ethos”) as these underlying foundational attitudes become enshrined as
self-maintaining social norms. However, if the underlying social norms
begin to erode over time, a society historically exhibiting a strong
taxpaying ethos can quickly flip into a non-compliant one once a tipping
point is reached.
With the exception of some aberrational sub-groups, the United States
typifies a society with a strong taxpaying ethos. However, in recent
decades the social norms forming the foundation of this ethos appear to
have weakened. Scandals at the Service have weakened its public image.
The rise of the tea party movement has questioned the efficacy and role
of government, as well as promoting the highly questionable proposition
that Americans are currently “overtaxed.” Politicians, who should defend
the government that they were elected to run, often act to undermine its
legitimacy and advocate for steep spending cuts in addition to tax
reductions.
These forces, among others, threaten the very foundations of our tax
system by undermining our historical societal faith in the fairness of
our tax system and the obligation to fund necessary government services.
The Tax Foundation has drawn up a map that purports to show how cigarette smuggling in the United States is correlated to the tobacco tax rates in those states.
So, for instance: “New York is the highest net importer of smuggled cigarettes, totaling 56.9 percent of the total cigarette market in the state.
New York also has the highest state cigarette tax ($4.35 per pack), not counting the local New York City cigarette tax (an additional $1.50 per pack).
Smuggling in New York has risen sharply since 2006 (+59 percent), as has the tax rate (+190 percent).”
The phone security consultants “pindrop” have done some back-of-the-envelope calculations on the massive ongoing criminal operation in which American immigrants are shaken down over the phone by people masquerading as IRS agents. They estimate that 450,000 people were targeted by this scam in alone.
Pindrop also posted their analysis of how the scam works, and even some excerpts from a recording of one of the calls.
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.
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.
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.
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.
The Boston Review takes a closer look at the Boston Tea Party, and how American perspectives on who did it and what it meant have changed over time.
James Ferguson looks at the new ability of the government to revoke passports from people with tax debts in the light of the long-standing international legal norm concerning freedom to travel.
Bucking recent downward trends, the IRS actually picked up a budget increase from a hostile Congress.
The increase restores part of what was cut from the agency budget last year and reportedly earmarks it for taxpayer service, fraud detection, and cybersecurity.
Along with the money came a set of new restrictions on the agency and its employees, most of which seem to be in the category of “appearing to put the screws to the IRS for the benefit of any constituents in the Tea Party who may be watching.”
With Congressional hostility and budget-slashing added to the mix, the jobs of IRS workers are even more miserable than usual lately.
It doesn’t help recruitment when your facilities are infested with bedbugs.
The bed bugs were so bad at her new job with the Covington IRS office that some people covered their seats with plastic bags, Kelly Anderson said.
After two days, she quit.
“It’s important to have a second income in our home, but it’s not worth the risk of bringing those home.
So, I will not be returning back.”
And that’s not the only kind of bug the IRS is plagued with.
A computer glitch caused the agency to emit tens of millions of dollars in refunds that its software had identified as likely to be fraudulent and that should have been held up.
Another IRS office closed abruptly recently, posting a sign in its window reading “This office is closed due to local weather conditions.”
This on a sunny day in California’s central valley, leaving frustrated taxpayers, who had driven in from as far as three hours away, fuming.
Some recent links from here and there related to tax resistance:
International
Here’s an interview with Tommaso Cerno, who has recently launched a tax strike for gay rights in Italy.
“Only one weapon of resistance remains to us: to evade the state that does not recognize our rights at the only place where it does consider us equal: when we pay taxes.”
Tax resistance plays a role in the anti-bullfighting movement in Galicia, to pressure the government not to allocate public funds to events that feature bullfighting.
The Suepples public employees union in Venezuela, saying that employee salaries have not kept up with tax hikes, made a declaration of tax resistance.
“We aren’t just refusing for the fun of it, we refuse because we’re broke,” said finance secretary Adela Otaiza.
The government is using astronomical inflation to ratchet up taxes and ratchet down public employee wages to make up for drops in oil revenues and a poorly overmanaged socialist economy.
Procedurally Taxing takes a closer look at the new law that allows the government to deny or rescind passports of people with large tax debts.
(My own debt is getting large enough that it may trigger this within a couple of years, so I’m paying close attention.)
This article asks if a bankruptcy that removes or reduces your tax debt is sufficient to also remove the passport restrictions.
Read the comments, too.
The Institute for Justice has scored another victory against IRS civil forfeiture, successfully winning back Ken Quran’s life savings that the agency tried to steal from him.
Cash transactions are harder to tax (or to ban) because they don’t leave as much of a trace.
So governments have begun floating ideas to discourage or eliminate cash.
The latest salvo was a New York Times editorial encouraging the government to eliminate the $100 bill.
I just got back from Mexico, where I’ve been .
In small part, this vacation was a test to see whether I could still travel outside the U.S., as the government is newly authorized to revoke the passports of people like me who have more than $50,000 in outstanding taxes.
The government seems to have other things on its agenda as of late than chasing down scofflaws like myself, however.
I had no trouble using my passport.
On the other hand, this policy is new, and my overdue taxes only recently topped the $50,000 threshold, so it might just be a matter of time.
In part, my visit was also meant to see whether or not craft beer has finally taken off in Mexico. As of my 2010 visit, it hadn’t, really. I’m happy to report that it finally has.
I found a large variety of styles of microbrews from many breweries available in many restaurants and even in a couple of convenience stores.
I didn’t bring my laptop along, but was able to tap in to the news from time to time with my phone and to follow along with delight as the U.S. government continues its headlong rush into disrepute.
As the icing on the cake, Chelsea Manning was finally released.
Also, for what it’s worth, while I was out I got a routine letter from the IRS complaining that I hadn’t paid my taxes for , and adding small amounts of penalties and interest (about $31) to the total.
I recently got a “Notice of intent to seize (levy) your property or rights to property” from the IRS with respect to my unpaid federal taxes.
This is standard procedure.
The IRS does this soon after I don’t respond to their initial letter asking me to pay up.
They send the notice of intent to levy letter by certified mail, meaning I’m to sign for it at the time of delivery, as a way of trying to make it seem more like a big deal than their usual letters.
The letter, and an accompanying copy of Publication 594 (“The IRS Collection Process”) give some more clues about how the government may decide to enforce its new powers to refuse or to revoke passports for people with large amounts of unpaid taxes.
The impression I’d had before is that the law requires the IRS to notify the State Department once somebody’s unpaid taxes (plus penalties and interest) exceeds $50,000, and at that point the State Department may rescind that person’s passport, refuse to issue that person a passport, refuse to renew that person’s passport, or restrict that person’s passport so that it will no longer be good for anything but reentry into the United States.
But I didn’t have much to go on, and I haven’t heard of any cases of this law actually being used yet, so it’s hard to know exactly what to expect.
But here’s how the IRS puts it in Publication 594:
IRS action affecting passports
The Fixing America’s Service Transportation (FAST) Act of , enacted by Congress and signed into law on , requires the Internal Revenue Service to notify the State Department of taxpayers certified as owing a seriously delinquent tax debt.
Seriously delinquent tax debt means an unpaid, legally enforceable federal tax debt of an individual totaling more than $50,000 (including penalties and interest) for which a Notice of Federal Tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted, or a levy has been issued.
If you are individually liable for tax debt (including penalties and interest) totaling more than $50,000 and you do not pay the amount you owe or make alternate arrangements to pay, we may notify the State Department that your tax debt is seriously delinquent.
The State department generally will not issue or renew, and may revoke, your passport after being notified of your seriously delinquent tax debt.
For additional information on passport certification visit www.irs.gov/passports.
The “Notice of intent…” letter contains similar text:
Denial or revocation of United States passport
On , as part of the Fixing America’s Service Transportation (FAST) Act, Congress enacted section 7345 of the Internal Revenue Code, which requires the Internal Revenue Service to notify the State Department of taxpayers certified as owing a seriously delinquent tax debt.
The FAST Act generally prohibits the State Department from issuing or renewing a passport to a taxpayer with seriously delinquent tax debt.
Seriously delinquent tax debt means an unpaid, legally enforceable federal tax debt of an individual totaling more than $50,000 for which, a Notice of Federal Tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted, or a levy has been issued.
If you are individually liable for tax debt (including penalties and interest) totaling more than $50,000 and you do not pay the amount you owe or make alternate arrangements to pay, we may notify the State Department that your tax debt is seriously delinquent.
The State department generally will not issue or renew a passport to you after we make this notification.
If you currently have a passport, the State Department may revoke your passport or limit your ability to travel outside of the United States.
Additional information on passport certification is available at www.irs.gov/passports.
I took another look to see if I could find what the law requires of the State Department once it receives such a certification.
What must they do, versus what may they do.
Here’s what I found:
Authority to Deny or Revoke Passport.—
Denial.–
In general.— Except as provided under subparagraph (B), upon receiving a certification described in section 7345 of the Internal Revenue Code of 1986 from the Secretary of the Treasury, the Secretary of State shall not [emphasis mine —♇] issue a passport to any individual who has a seriously delinquent tax debt described in such section.
Emergency and humanitarian situations.— Notwithstanding subparagraph (A), the Secretary of State may issue a passport, in emergency circumstances or for humanitarian reasons, to an individual described in such subparagraph.
Revocation.–
In general.— The Secretary of State may [emphasis mine –♇] revoke a passport previously issued to any individual described in paragraph (1)(A).
Limitation for return to united states.— If the Secretary of State decides to revoke a passport under subparagraph (A), the Secretary of State, before revocation, may [emphasis mine —♇]–
limit a previously issued passport only for return travel to the United States; or
issue a limited passport that only permits return travel to the United States.
Upon receiving certification, the State Department shall deny your passport application and/or may revoke your current passport.
If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.
I also noticed something new that showed up on my IRS Account Transcripts last month:
I’d never seen this notation before, and hadn’t noticed anything new happen on or about .
That particular 971 code isn’t listed at this voluminous list of IRS transaction codes, nor in the IRS’s own Document 6209 in which these codes are spelled out.
I dug around some on-line and found very little information, but tax agent Patti Logan was also sniffing around on the same trail, and here’s what she uncovered:
…the “Initial levy imposed” that we are finding on some of our clients’ account transcripts… is a first step in identifying which accounts meet the criteria of IRC 7345 for passport revocation, denial or limitation.
There are four criteria for individuals to have their passport sent to the Secretary of State: 1) Tax must be assessed 2) taxpayer must owe over $50,000 3) a levy has been served in the past or 4) a lien was filed on the account.
So, IRS came up with a new code, transaction code 971 with action code 640, which shows up on the transcript with “initial levy imposed.”
This just indicates an account that has had a levy served in the past.
It is being put on all individual accounts where a levy has been served no matter if the taxpayer owes $50,000 or not.
The other criteria must still be met.
So it is not telling the taxpayer that they have been reported to the Secretary of State but it is a first step.…
A new issue of NWTRCC’s newsletter is out, with content including:
In 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 Annual Report to Congress, that explains why:
In , 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 , 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 , 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.)
Some links from here and there:
The new U.S. government policy of denying passports to people with large federal tax debts is beginning to get more fundamental criticisms. Here’s Kevin D. Williamson at National Review:
The U.S. government is building the world’s largest debtors’ prison: the United States.
The right to travel is — like the right to free speech, the right to be free from unlawful search and seizure, and the right to petition the government for redress of grievance — a basic civil right.
Americans as free people have a God-given right to come and go as they please, irrespective of the preferences of any pissant bureaucrat in Washington.
Yes, we curtail people’s rights in certain circumstances — when they have been charged with a crime and convicted after due process.
Tax fraud is a crime; having unpaid taxes is not.
According to a new study, the “tax gap” — the difference between what the law says people owe and what they actually cough up — has probably been vastly underestimated.
This is because the very wealthy evade taxes at a higher rate, and have more access to more sophisticated tax evasion strategies, than the rest of us, and the tax gap estimating methodologies don’t sufficiently take this into account.
This is more ammo for the “rich people don’t pay their fair share” argument.
The researchers concentrated on Scandinavia, and took advantage of data revealed in the Panama Papers and related leaks.
They found that while on average 3% of personal taxes are evaded in Scandinavia, households in the top 0.01% of net wealth evade taxes on about 25% of their income via the use of offshore accounts.
Notes on issues for war tax resisters crossing the border, glitches with the latest tax bill, the difficulty in understanding IRS interest rates, new estate tax exemption limits.
Advice on starting a local war tax resistance support group, writing letters of protest to the IRS, and a review of “Walden: The Video Game.”
Passports and unpaid taxes: Thanks to the Fixing America’s Surface Transportation Act of , a person’s passport could be revoked or denied if he or she owed a big federal tax bill.
The spending bill clarifies the judicial review of certifications that would lead to the loss of travel papers.
Now there must be judicial review of the Treasury Secretary’s certification that an individual has a seriously delinquent tax debt, either in a U.S. district court or in the Tax Court.
The provision also clarifies that the party against whom a Tax Court petition is filed is the Commissioner of the Internal Revenue Service and provides a tie-breaker rule clarifying that the court first acquiring jurisdiction over the action has sole jurisdiction.
In a law went into effect ordering the State Department to revoke passports from and deny passports to anyone if the IRS tells them that person has a significant tax debt (defined now as a debt greater than $51,000, I believe), if that debt isn’t being resolved or disputed through legal channels.
That law also requires the IRS to notify the State Department of any such taxpayers.
It’s taken them a long time to start coming into compliance with this law, but they said they would be starting earlier this year.
I have yet to hear of any examples of tax resisters being targeted by this, however.
I’ve had a tax debt greater than than the trigger amount for some time now.
In addition, the IRS filed a tax lien against me earlier this year for a bit over that amount.*
So I was a little nervous when I traveled to South America on vacation .
But I didn’t have any passport trouble coming or going.
Acting on a hunch that the government might be quicker to deny passports than to revoke passports they’ve already issued, I decided to try to apply for a renewed passport immediately upon my return, even though my existing passport still had a few years to go before it was to expire.
I thought maybe I could get a new one before they succeeded in rolling out their process.
Long story short: my new passport came in the mail.
So from the looks of it, they still aren’t enforcing this law with much rigor.
* Between the time the IRS filed the tax lien and the time I applied for the renewed passport, one of the years of tax “delinquency” on the lien became unenforceable because it passed the ten-year statute of limitations.
That may have dropped the amount still enforceable via the lien below $51,000, though my total tax debt remained higher (for obscure reasons, the lien did not include the total amount of tax debt the IRS is pursuing me for).
I’m not sure whether that’s relevant, but it could be.
I kind of doubt it, because for that to have made a difference the government would have to have been keeping a closer eye on things and reacting more rapidly to things than the other evidence suggests they’re capable of.
Links have been piling up in my bookmarks as I spent
poring through
back issues of The Mennonite.
International Tax Resistance News
A new law in Samoa requires previously untaxed church
ministers to pay income tax. Many, including those from the country’s
largest church,
are refusing to pay.
The United States government has begun
denying passports to people with large tax debts.
If you’re one of the 362,000 or so Americans who owe more than $51,000 and
you haven’t entered into an installment payment plan (I’m one of those),
you will likely soon find that you cannot successfully apply for or renew
your passport. While the government also has the legal authority to revoke
existing passports from such people, it is not yet exercising that
power.
Guerrilla electricians in Greece continue to
reestablish electric power
to households who have had their power cut off for inability or
unwillingness to pay the state utility monopoly’s bills which have been
inflated to support the state’s austerity budget policies.
Veterans of the successful campaign to abolish the
“écotaxe” in Brittany held
a celebratory picnic
on the anniversary of the destruction of one of the highway portals that
would have enforced the hated tax. In part the picnic was meant to show
solidarity with those who had been convicted of criminal charges for the
parts they played in destroying such portals, and in part it was meant as a
show of strength to let the government know they would not tolerate any
attempts to reestablish the tax.
The increasing use of traffic-ticket-issuing cameras worldwide as a
government revenue booster has led to a rash of direct action by the victim
population. This usually takes the form of destroying, disabling, or
blocking the cameras. Here are several recent examples:
Launched on as another variety of civic struggle against the dictatorship, the proposal to carry the thesis of civil disobedience to the extreme of applying a “tax strike” is still in force, but has not yet switched on, except in the Mercado Oriental.
On that date, the Academy of Sciences, and the Academy of Legal and Political Sciences, called for “civil disobedience as a national imperative to be put into operation immediately,” inviting employers, workers, students, and taxpayers to immediately suspend the payment of taxes to DGI, DGA, and city hall, in particular “withholding of Income Tax from salaries.”
Although the call for tax resistance enters the popular imagination as a civil form — and for that reason a legitimate one — of resisting the regime of Daniel Ortega, neither businesses nor individuals have responded with determination to the proposal, from fear or from caution.
Caution as demonstrated by the sources consulted for this article, who requested anonymity as they explained that people, business-owners and managers in particular, are afraid that the tax administration will fine them or, worse yet, temporarily take over operation of their companies or shutter their business.
Not all of the sanctions are catastrophic.
There are cases in which the fine applied is equivalent to 2.5% of the amount not paid in the case of the monthly advance payment of the business income tax, or 5% in the case of the value-added tax or of income tax withheld from the salaries of employees.
“Technically, it’s an invalid appropriation of withholdings, and can be criminally sanctioned,” in addition to being shut down, fined, or temporarily put under government management, explained a source with extensive experience in tax matters.
That said, this source sees a variety of reasons to doubt that they would decide to take such extreme measures, beginning with “as far as I know, they have never applied them to anyone.”
Another is that to close a business means sending its workers into unemployment, which implies that they will not receive taxes from the business or from those consumers.
But beyond believing in the mercy that any of these reasons implicitly assumes, the source points out fact that is easier to accept:
“If the resolution is massive, the tax administration simply does not have the capacity to audit and penalize everyone at once.”
Larger Companies Have More Fear
If it is decided to penalize only some in order to set a precedent that strikes fear into the others, surely one of the larger ones will be chosen, which not only has more ability to defend itself in the courts, but also to negotiate, precisely because of its size.
Another source asserts that “although it may seem obvious, the businesses that take the least risk are the most powerful ones, for the simple reason that they are not big taxpayers but big tax collectors.
“The DGI, does not want to be bothered with them, because if they weaken them, this affects tax revenues, principally value-added tax withholding.”
When the big companies that could take such measures don’t apply them, despite their intrinsic power, they are demonstrating “the cowardly face of big capital.
If they would decide, the blow to DGI would be immense,” s/he says.
Róger Arteaga, former director general of Revenue, agrees, saying that “big capital has not wanted to go all-in.
It is true that it gave its approval to the strike, but did so with fear and only temporarily.”
There is at least one group that risks more in a tax strike: import and export companies, which require clearances that can only be obtained once they have paid the corresponding taxes.
“If one of these business doesn’t make its monthly statement, or makes it but doesn’t pay, it falls into insolvency, and can neither import nor export.
The only importers who could afford that ‘luxury’ would be those that have sufficient product already on hand, especially at times like these, when there is little movement of inventory,” explained one of our sources.
Small- and medium-sized businesses — both fixed-quota and general regime — can stop paying taxes as long as the situation does not normalize, and while this makes them vulnerable to penalties, it is not likely that this will occur, especially, again, if a critical mass applies this measure of fiscal chastisement.
How long can the government last without taxes?
Our sources note that before making tax payments, the employer must guarantee the salary of its employees, and that the decision not to pay taxes is “protected by the higher legal concept, legally enshrined in the national legislation, as the Act of God and the Force Majeure.
Nobody is obligated to do the impossible, and the reason for this impossibility lies outside the control of the employer or employee.”
Citizens, on their part, could put pressure on big and medium-sized business, offering to act together if the Treasury moves against them.
“In this context, big capital must play a consistent role, acting firmly in the face of a Treasury that has granted them such special privileges.
It would be their most authentic repentance for the eleven years of tax advantages they have taken in the shadow of power.
That stain should be washed out right away,” they say.
As an expert, Arteaga proposes “that the businesses do not charge value-added tax, and the citizens not pay it.
Income tax also.
There are penalties, but the penalties and decisions of this government must be ignored, as they have no legitimacy.
How long can the government last without taxes?” he asked.
“Tax resistance aims to respond to Ortega’s claim that he will stay on through : we must find a solution, and one of these is for the private sector finally to decide on civil disobedience of a monetary and tax nature,” he explained.
Pedro Muñoz Fonseca, president of the executive committee of Costa Rica’s Social Christian Unity Party, urged Nicaraguans to use tax resistance against their government:
Social Media Tax Protest in Uganda
The government of Uganda has imposed a 5¢-per-day tax on using social media and
other services. This was designed as both a revenue measure and a way of
reducing what Ugandan president Yoweri Museveni calls lugambo
(“fake news”). Amnesty International has been among those to see through the
government’s rhetoric and cast the tax as
“a
clear attempt to undermine the right to freedom of expression.”
Robert Kyagulanyi, a Member of Parliament better known by his musician
stage name Bobi Wine, whose election is in part credited to his success on
social media, has been at the forefront of protests against the tax.
He was arrested, along with
three reporters when a march protesting the tax was attacked by police
with tear gas and rubber projectiles, but they managed to escape.
Ugandan protest marchers wearing shirts featuring a smart phone screen that
reads “This Tax Must Go”
War Tax Resistance Around the World
ABC reports on war tax resisters in Valencia — “the new refuseniks”.
War tax resisters there typically refuse to pay some percentage of their taxes, often basing this on the percentage of the federal budget that is spent on the military and similar items, and redirect this money to more worthy charities.
They declare this deduction on their tax forms in such a way that the tax agency typically does not treat it as illegal tax evasion but as an error or mistake.
The Global Day of Action on Military Spending Final Report has been released.
It gives a summary of the various events that took place around the world, including several by war tax resisters and groups promoting war tax resistance.
There’s a new NWTRCC newsletter out, with content including:
Ideas & Actions concerning weapons-free investing, responding to arguments against war tax resistance, a fast for nuclear disarmament, and more
You can now listen to audio excerpts from the upcoming documentary The Pacifist, about war tax resister Larry Bassett, on Spotify.
Erica Leigh pores through back issues of Conscience, the newsletter of the Conscience and Military Tax Campaign, an American war tax redirection group that slightly predates the founding of the National War Tax Resistance Coordinating Committee.
Raymond Hunthausen has died.
As Catholic archbishop of Seattle, he took a remarkably strong stand on nuclear weapons — famously calling the Trident nuclear submarine program being developed nearby “the Auschwitz of Puget Sound” — and began practicing war tax resistance in response.
This earned him enemies in Washington and in the Catholic hierarchy. Here are some of the obits and remembrances:
A biography of Hunthausen, A Disarming Spirit, will be released soon.
David McReynolds has died.
He was a long-time War Resisters League and Socialist Party activist and was also on the staff of the Committee for Nonviolent Action which helped to spearhead war tax resistance as a tactic during the campaigns opposing the American war in Vietnam.
He was among the signers of the “Writers and Editors War Tax Protest” in and of a similar public pledge .
David Paul Irish has died.
He was active with the Fellowship of Reconciliation, Women’s International League for Peace and Freedom, Peace Brigades International, and Witness for Peace.
He was an advocate for war tax resistance in the Society of Friends, drafting a minute in favor of of war tax resistance that the Twin Cities and Minneapolis Meetings approved in .
Today I’ll share some links about tax policy and tax resistance in the United States that have caught my attention recently.
First, though: I’ve started a Wikipedia page on Tax resistance in the United States that covers how theories about tax resistance have shaped (and been shaped in) the U.S., and how tax resistance in practice has played out in the country.
Wikipedia is an open, collaborative project that anyone can help to edit, so I encourage you to learn what it’s all about and how to help make it better.
Now on to the links:
Tax Evasion
The New York Times got its hands on a trove of financial documents concerning the real estate empire of Fred C. Trump, Donald Trump’s father, and published a well-done exposé on what they found.
From the point of view of today’s political squabbles and tomorrow’s history lessons, the takeaway is that Donald Trump’s brand, in which he is represented as a self-made business prodigy, is a laughable con job.
From our vantage, however, what’s interesting is the extent to which the Trump family used legal, effectively-legal, and illegal methods to evade taxes.
They paid a fraction of what they owed, again and again.
This may help bolster the widespread feeling that rich people commonly get away with tax evasion, sticking it to the little guy.
This in turn erodes “tax morale” which causes voluntary tax compliance to fall.
Another bit of journalism hammering on this theme (though more free-wheeling and not as methodically precise) comes from GQ: “How Puerto Rico Became the Newest Tax Haven for the Super Rich”.
Apparently if you can convince the IRS that you’ve become a permanent resident of the U.S. Territory of Puerto Rico, you’ll find yourself in “the only place on U.S. soil where personal income from capital gains, interest, and dividends are untaxed.”
General Government Failure
“The federal government could soon pay more in interest on its debt than it spends on the military, Medicaid or children’s programs.”
Thus begins a New York Times article on the growing federal government debt.
“Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office.”
The more the federal government is reduced to being a collection agency for bondholders, the less mischief it can get up to elsewhere.
Far from addressing this problem, today’s policymakers are exacerbating it, so we have more such headlines to look forward to.
The National Taxpayer Advocate says that the IRS is cooking the books when they report their numbers on how their phone “customer” service is doing just fine.
For one thing, they don’t measure the phone numbers with the worst service.
For another, they don’t count getting tangled up in an unhelpful “press X for Y” phone menu and then hanging up in frustration as an unsuccessful call.
For another, they count merely talking to an IRS operator as a successful call, whether the operator was able to resolve the problem or not.
Republicans are prone to complain about the percentage of U.S. households who are so poor they don’t have to pay income tax (remember Mitt Romney’s revealing “47%” comments way back when?
Or the Wall Street Journal’s “lucky duckies” editorials?).
But that didn’t stop them from crafting their major tax legislation (the recent “Tax Cuts and Jobs Act”) in such a way that it will increase the percentage of American households who pay no federal income tax.
The Tax Policy Center estimates that fully 44% of American households will pay no federal income taxes at all (2% more than ).
About 25% will pay no payroll tax either, or their payroll tax will be offset by a refundable income tax credit.
“Millennials” (says the New York Times)
are joining together to swap techniques for quitting the rat race and retiring early, in something called “the FIRE movement.”
They begin to live more frugally, squirrel things away, take greater care of their investment decisions, and eye an early modest retirement or semi-retirement.
Most of the examples in the article are of pretty well-off people who really just needed to stop living at or above the lifestyle they could afford.
But it’s people like them who pay the taxes, and by stepping off the treadmill, they stop doing so or at least stop doing so much.
So if you know anyone in that category, send them a link.
About ten years ago the number of Americans renouncing their U.S. citizenship began to shoot up, from what had been a normal range of two to eight hundred people a year to a high of 5,409 people in .
But things seem to have leveled off since then.
Why?
Your guess is as good as mine, maybe better.
Today I got a “Notice of certification of your seriously delinquent federal tax
debt to the State Department” from the
IRS.
This is something new, though it’s not unexpected. In
, Congress passed a law requiring
the IRS
to notify the State Department of people with large tax debts. At the time,
large meant $50,000, but inflation-adjustments have caused that to rise to
$52,000 today.
I’ve been over the threshold for most of the time the law has been in effect,
so it’s something of a mystery as to why it’s taken them so long to get to me.
It’s the usual bureaucratic paralysis at the
IRS, I
expect. I took advantage of the delay to apply for a renewed passport a little
while back, and, though I was already “seriously delinquent” at that time, the
State Department issued me one without blinking.
So I’ve got several years yet before that passport expires. At that point I
guess I become a prisoner here (though I hear the borders are a little leaky).
I’m trying to think of it in a romantic way — like being a Soviet dissident
or something — and not in a claustrophobic one.
I also will have a little anxiety next time I try to cross the border, not
knowing whether they might flag my passport or even try to seize it as I
travel. I’m guessing not — that if the State Department decides to revoke it
(which is optional: the law says they can do it, whereas in contrast
they must not issue me a new passport or renew it) they’ll do so by
sending me a letter or something, not by waiting until I’m at a border
crossing. But I could be wrong about that.
Some links from here and there:
There’s a new National War Tax Resistance Coordinating Committee newsletter
out, with content that includes:
Joining an “Extinction Rebellion” protest — Ruth Benn says that while XR is “a little too focused on its own brand” there may be some common ground to be found with the climate emergency protesters and the war tax resistance movement.
American anti-abortion tax resister Michael E. Bowman is back in the news. Among the latest details are that Bowman was first targeted by the IRS because of his involvement in a tax protest scheme cooked up by Joseph Saladino. He is trying a Religious Freedom Restoration Act defense (which is also a long-shot contemplated by some U.S. war tax resisters), and is also putting forward the theory that because he got away with not filing returns for eighteen years, he therefore had a reasonable belief that what he was doing was lawful. Bowman has had some success in court in the past, with a judge ruling that his actions of cashing his paychecks rather than depositing them (so as to avoid IRS levies) did not constitute criminal evasion.
The IRS seems to be getting more aggressive about trying to get passports revoked from people who have large tax debts. Under the law, if a taxpayer owes more than $52,000 and isn’t doing anything about it, the agency is supposed to inform the State Department. The State Department is then required to not issue or renew a passport to the scofflaw, and may also revoke their existing passport. The IRS is trying to convince State to put that “may” to use. The agency says it plans to send out Letter 6152 (“Notice of Intent to Request U.S. Department of State Revoke Your Passport”) to some tax delinquents, after which it will lobby the State Department to take stronger action (of this advice State can still, as far as I can tell, take it or leave it).
Some notes on recent trends in tax enforcement, including frivolous fines, wage garnishment, audit rates of the poor, state-and-local tax deduction limits, and cooperation between tax enforcers in the U.S. and Canada.
According to the details of the newish law concerning passports and tax
scofflaws, when the amount of someone’s overdue taxes rises above a certain
threshold ($52,000 last I checked), the
IRS
must notify the State Department, whereupon the State Department
must not issue a new passport to that scofflaw or renew their existing
passport (unless the scofflaw is taking certain specified steps to pay up or
contest the tax debt), and may revoke any existing passport that
person has.
That’s all the law allows for. It does not specify under what circumstances the
State Department should revoke existing passports, or even mandate that they do
so at all. It is merely an option. Now it emerges that the
IRS hopes
to put more teeth into that provision on its own initiative. It plans to send
requests to the State Department, on a case-by-case basis, asking State to
revoke the passports from people the
IRS
believes might thereby be prodded into paying what they owe.
This process is not something that was explicitly authorized by the law, but
TIGTA
didn’t seem to think that was a problem. “There is no law or regulation that
directly authorizes the
IRS to
prioritize taxpayers to be referred to the State Department for revocation;
however, we believe it is reasonable for the
IRS to
provide the State Department with taxpayers for possible revocation to comply
with the law.”
Some recent tax resistance links of note:
Long-time war tax resisters Arcadi Oliveres and David Zarembka have died.
Oliveres was one of the founders of the modern war tax resistance movement in Spain, while Zarembka was one of those who helped NWTRCC get off the ground in the United States, serving as its first treasurer.
More info:
Chuck Faber’s tribute to David Zarembka on A Friendly Letter, including autobiographical writings from Zarembka himself that go into his five decades of war tax resistance in detail
In my last update I noted that the city government of Vic had decided to stop remitting its taxes to the Spanish federal government, instead sending those taxes to the independence-minded Catalan government.
Vic has now been joined by Girona, capital of Girona province, as well as some other medium-sized towns.
The U.S. State Department can refuse to give you a passport or can revoke your existing passport if the IRS tells them you’re way behind on your taxes and aren’t doing anything about it.
And the IRS can make this happen just by notifying the State Department.
Is that unconstitutional? To take away your fundamental right to travel without due process of law?
Paul L. Caron, at TaxProf Blog, investigates the issue and a recent test case that did a poor job of trying to test it in Tax Court.
Caron doesn’t think the constitutionality argument will work, even if it is raised more competently in a more receptive legal forum.
For one thing, the right of an American citizen to travel internationally is not very well protected by American law: the courts do not consider it to be all that important.
For that reason, the courts’ threshold for what they consider sufficient “due process” to deprive you of such a right is pretty low.
President Biden has now come out and said explicitly what had been suspected: that he hopes to help fund his spending spree by increasing IRS enforcement spending, as part of a sock-it-to-big-business plan that also includes increasing corporate tax rates, broadening the corporate tax base, and eliminating big business loopholes.
We’ll have to keep an eye on this as it burbles through the legislative tract.
I got a letter from the IRS that informed me they had notified the State Department that because I have a “seriously delinquent federal tax debt” that I ought to be denied a passport.
That in itself was a little peculiar, because they had already gone through this process back in .
Why, I wondered, are they doing it again?
By the terms of the law, such a notification to the State Department isn’t the sort of thing that expires and has to be periodically renewed, but is supposed to remain valid until revoked by the IRS.
So I did a little digging.
I looked at my account transcripts at irs.gov and discovered that, oddly, the agency had indeed issued its certification of my seriously delinquent federal tax debt in , but then had done it again in and then had reversed that certification in before again reapplying it .
There’s no rhyme or reason to that as far as I can tell.
My tax debt never fell below the threshold at which they are supposed to make this notification, and even if it had, the way the law is written makes the certification a sort of ratchet: it turns on when your tax delinquency reaches a certain dollar-amount threshold, but then doesn’t turn off until that amount gets all the way down to zero (or you enter into a payment plan or other such formal agreement).
This seems to have just been a glitch of some sort.
But that’s not the only interesting part of the notice I got yesterday.
It also contained a table of the tax years they’re pursuing me for.
It looks like this:
Your billing details
Tax period ending
Form number
Amount you owe
Additional interest
Additional penalty
Total
12/31/2010
1040
0.00
12/31/2011
1040
6,987.57
42.06
0.00
7,031.63
12/31/2012
1040
7,377.70
44.40
0.00
7,422.10
12/31/2013
1040
9,685.85
58.29
0.00
9,744.14
12/31/2014
1040
8,750.76
52.66
0.00
8,803.42
12/31/2015
1040
7,639.13
45.97
0.00
7,685.10
12/31/2016
1040
6,076.56
36.57
0.00
6,113.13
12/31/2017
1040
7,410.80
44.60
0.00
7,455.40
12/31/2018
1040
7,833.64
47.14
174.03
8,054.81
Two things to notice about this table: First, the blanks in the tax year 2010 row.
That’s further verification that the 2010 tax year has slipped beyond the statute of limitations deadline and that the IRS considers it permanently out of reach.
Second: the years stop at 2018.
The 2019 tax year is conspicuously missing.
That suggests to me that they’re still sitting on the tax return I filed more than a year ago, having not yet gotten around to entering it into their databases.
It’s further evidence of just how badly things are going for them over there.
Some recent links from hither and yon:
Do citizens of the United States have a presumptive right to travel elsewhere, or is that a privilege that the government may withhold at its whim?
This has become a live question thanks to the newish law by which the State Department can revoke passports from (or deny passports to) people the IRS reports have significant unpaid taxes.
Papers, Please! reviews the state of the law and the tenuous right to travel.
Catalan restaurateurs, who protested for independence by redirecting their taxes from Spain to essential services in Catalonia for seven years, have been hit by a €300,000 fine by the Treasury agency in Madrid.
They responded with receipts and an accounting of where the money went — including to local schools and hospitals — but the tax agency was unmoved.
They plan to continue their fight and have started an on-line fundraiser to help pay their legal bills.
The IRS is “pleading for patience” as it deals with the backlog of last year’s tax returns it hasn’t processed yet.
I filed my return back in April or thereabouts and the IRS hasn’t processed it yet.
I always file my tax returns on paper by hand so I’m not too surprised that mine ended up on the procrastination shelf.
