Tags: US | passport | Tax | Collection

US Explores Using Your Passport for Tax Collection

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Monday, 28 Nov 2011 08:41 AM Current | Bio | Archive

Imagine you are going through airport security on your way to a well-deserved exotic vacation. When your passport is checked on the computer, a problem pops up.

You are asked to step aside and go with the nice, but heavily armed, officer who has some questions to ask you about your tax returns and the claim by the government that you owe more taxes.

How could this happen?

After all, you have always been told that your tax information would be a closely guarded secret between you, your accountant and the IRS. How could this show up on an airport computer?

It is true that under current federal statutes, it is illegal for the IRS to share tax information with other government agencies. That is, except for the State Department when the government determines someone is expatriating for tax-avoidance purposes.

Since the State Department has responsibility for passports, then it would seem to make sense to those in government to coordinate tax compliance with obtaining or maintaining a passport.

If expatriating for tax avoidance can be an exception, then why not carve out an exception for unpaid taxes?

There is a widely held assumption by a vast number of taxpayers that all financial information will be kept secret by the IRS and not shared with any other government agency. After all, we are all told that income tax compliance is based on it being a voluntary system with privacy of tax filings being assured.

The policy behind the promotion of the federal income tax being "voluntary" and the tax information being kept private is that without the taxpayer's believing in this few would trust the government and pay tax.

So how can the government keep income taxes as voluntary and the taxpayer's financial information kept private when the State Department is brought in as a part of the tax enforcement apparatus?

This latest GAO Report, prepared at the request of Senators Chuck Grassley and Max Baucus, explores just this question.

As a matter of political power, Grassley and Baucus have controlled the Senate Finance Committee (which controls tax legislation in Senate) for many years between them.

They, along with the House Ways and Means Committee, have created thousands of pages of tax-enforcement legislation.

Apparently, in spite of all those efforts, the government claims that there are still hundreds of billions in unpaid federal income taxes. Potentially, as the GAO points out, passport issuance may be a means to increase collection of unpaid taxes.

What the GAO did not report on is the impact this will have on taxpayers.

Yes, the government may be able to collect some more tax, but at what price to the taxpayers and the welfare of the country? And is that price worth it?

While involving this is just an exploratory idea by Grassley and Baucus, these sorts of trial balloons have a strange way of becoming law.

It may very well be that the next time you renew your passport or try to travel outside the United States that you will need to be blessed by the IRS and the State Department.

And how will you like that?

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Kleinfeld
Imagine you are going through airport security on your way to a well-deserved exotic vacation. When your passport is checked on the computer, a problem pops up. You are asked to step aside and go with the nice, but heavily armed, officer who has some questions to ask you...
US,passport,Tax,Collection
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2011-41-28
Monday, 28 Nov 2011 08:41 AM
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