Tuesday, May 3, 2011

Being Compliant with Federal Tax Obligations May Soon Be A Requirement For Passport Renewal

According to a recent Government Accountability Office (GAO) report, the State Department issued 224,000 passports to citizens who owed approximately $6 billion in income tax in 2008.  Purportedly that amount has increased over the last three years. Most of the perpetrators are both wealthy and from my perspective burdened with inflated hubris. If this is you, may God have mercy on your soul. PAY YOUR TAXES!

The current law stipulates that the State Department cannot decline your application for a new or renewed passport if you still owe taxes. The law also forbids the IRS from revealing your tax information to third parties including the State Department without your consent. The State Department can deny you a passport if there is: 
  1. a warrant for your arrest, 
  2. a court order disallowing you from leaving the US, or 
  3. a request for your extradition. 
  4. a failure to pay child support of more than $2,500.
In its report the GAO suggested that tax compliance be added to the list of reasons to decline the application for a passport whether new or renewal with this sentence. "If Congress is interested in pursuing a policy of linking federal tax debt collection to passport issuance, it may consider taking steps to enable State to screen and prevent individuals who owe federal taxes from receiving passports."

In addition the IRS formed a Global High Wealth Industry office charged with investigating tax compliance of wealthy American taxpayers. The number of audits on the wealthy has risen to 2,458 in 2009 among taxpayers who earn $10 million or more a year, an increase of 905 audits from the 2008 figure of 1,553. Likewise, the number of audits on taxpayers earning between $1 million and $10 million increased by approximately 50% to 21,660 over the same period. If you are professionally or financially successful chances are good that you are being watched and profiled so maintain compliance to protect yourself. 

John R. Dundon, EA - 720-234-1177 - jddundon@comcast.net - http://prep.1040.com/jd/ -  http://johnrdundon.com - Enrolled with the United States Department of Treasury to Practice before the IRS - Enrolled Agent # 85353. Under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent - I am a Federally Authorized Tax Practitioner (USC 31 Section 330 + IRC 7525a.3.A) regulated under US Treasury Cir. 230.