I joked a couple weeks ago about a bill that would afford the IRS to deny tax scofflaws a passport, but in anticipation of the inevitable controversy to come as the mainstream media catches wind of the proposal, we should probably devote a bit more attention to the bill.
While Kelly Erb over at Forbes has all the gory details, we’ll rehash the most important aspects of Senate Bill 1813: Map-21 here.
The bill, which passed the Senate on March 14th and now moves on to the House, contains a provision — hidden amongst 1,800 pages wroth of proposed legislation on topics as varied as hand-rolled cigarettes, boating safety and airplane noise — that would grant the IRS the ability to have the government deny, revoke or limit passport rights to an individual with a “seriously delinquent tax debt” in excess of $50,000.
Contemplated as an addition to the statute at I.R.C. § 7345, a “seriously delinquent tax debt” is one for which either a lien or notice of levy have been filed by the Service. Excluded from such debts are those that are being paid under either an installment agreement or an offer in compromise, and those for which collection has been suspended or innocent spouse relief is being sought.
Because a levy or lien can be filed by the IRS before the amount of the liability is definitively determined, this aspect of the bill calls into question the Service’s ability to limit travel of U.S taxpayers without due process. Erb is right on point with her analysis:
So let me summarize for you: if the IRS liens or levies you, the Department of State can choose to restrict your right to travel without a judicial hearing. To be clear, these aren’t cases of U.S. citizens who have been found to have committed a crime or have been proven to owe taxes. There’s no day in court. There’s no opportunity to argue a case or prove that there has been a mistake. In other words, it gives the IRS the authority to determine your future travel plans. No due process for you.
Erb goes on to make an extremely astute and accurate observation: the bill, like much of the 2012 proposed tax legislation we’ve seen to date – amounts to little more than political posturing; sacrificing a meaningful fix for the underlying problem (the tax gap) in exchange for a impactful voice-over sound bite in some Senator’s ad-campaign commercial.