Q COSTA RICA – Americans residing in or visiting Costa Rica, may be in for a surprise from the Internal Revenue Service (IRS), as U.S. tax man is on the prowl for people who have been living abroad but not paying their U.S. taxes each year.
In short, Americans owing more thanUS$50,000 dollars in Federal taxes or have a “serious delinquent tax debt”, could see a revocation or denial of passport.
According to the IRS website, “if you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that to the State Department. The department generally will not issue or renew a passport to you after receiving certification from the IRS.
From the IRS website: “If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that to the State Department. The department generally will not issue or renew a passport to you after receiving certification from the IRS.
“Upon receiving certification, the State Department may revoke your passport. If the department decides to revoke it, prior to revocation, the department may limit your passport to return travel to the U.S.”
Although this in not new, the law was introduced in 2015, the IRS has not yet started certifying tax debt to the State Department, but it could happen in the coming months, ‘early in 2017’ is what the IRS website states.
Those who have a ‘seriously delinquent tax debt’ to the IRS or ‘think’ they owe the IRS, it is strongly encouraged action be taken asap because having a passport revoked or denied a renewal while abroad could have very serious consequences.
Taxpayer Notification. However, the IRS is required to notify you in writing at the time it certifies seriously delinquent tax debt to the State Department. The IRS will send written notice by regular mail to your last known address.
Reversal Of Certification. The IRS will notify the State Department of the reversal of the certification when: the tax debt is fully satisfied or becomes legally unenforceable; the tax debt is no longer seriously delinquent; the certification is erroneous, to which it will provide notice as soon as practicable.
The notice is within 30 days of the date the debt is fully satisfied, becomes legally unenforceable or ceases to be seriously delinquent tax debt.
Passport Status. If your passport is revoked, the Department of State will notify you in writing.
Travel. If you already have a U.S. passport, you can use your passport until you’re notified by the State Department that it’s taking action to revoke or limit your passport. If the Secretary of State decides to revoke a passport, the Secretary of State, before making the revocation, may 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.
But, if your passport is cancelled or revoked, after you’re certified, you must resolve the tax debt by paying the debt in full, making alternative payment arrangements or showing that the certification is erroneous. As stated before, the notice can be up to 30 days.