By Carol Blair Vaughn

The United States Congress is about to enact a new law, H.R. 22 along with Senate Bill 1813, which will allow officials to deny new or revoke existing passports held by U.S. citizens who are more than $50,000 in arrears in their Federal Income Tax (IRS). The new law is expected to pass Congress in early December, and take effect on Jan. 1, 2016.

This new law should raise roughly $398 million over the next ten years, as part of a highway-funding bill. The law will not apply if a taxpayer is in the process of resolving a tax debt with IRS (i.e. paying on an installment plan), or contesting their tax bill in court, or traveling for humanitarian purposes.

With some 7 million U.S. citizens living abroad currently, who need their passports for identification, travel arrangements, identification, credit card purchases, residency applications, school registration, hotel stays, health insurance applications, real estate rentals or purchases – this could be devastating.

IRS sent 855,000 notices to U.S, citizens abroad in 2014, but many notices failed to reach the intended party due to difficulty with international addresses. IRS does not allow notices via email, only USPS, and their notices may not be forwarded internationally.

Says Charles Bruce, an American lawyer who advises the watchdog group American Citizens Abroad, “Americans abroad need their passports for many activities of daily life, (not having a passport) could be disastrous.”

The State Department and Embassies abroad could, however, issue an emergency passport, should the situation warrant one. No one knows exactly how many people would be affected if this law passes in December. Tax lawyers and accountants are encouraging Americans traveling or living abroad to pay close attention to all IRS notices, and to get caught up on all back taxes, including penalties and interest, as soon as possible.

It is unfortunate that unlike other countries, the U.S. has no representative in government for citizens residing abroad. Many expats may not understand their tax obligations, nor have access to tax help to resolve complicated issues.

It’s also unfortunate that only two countries in the world tax the worldwide income of their citizens who are nonresidents: Eritrea and the U.S.

About the Author

Carol Blair Vaughn holds a Master’s Degree in Performing Arts and is a retired college professor from Washington, D.C. She inherited her love for Latin America from her father, the former U.S. Ambassador
to Colombia, Panama, and Director of the Peace Corps, Jack Vaughn.

Carol writes for the Association of Residents of Costa Rica (ARCR) and for an English language club in the southern region of Costa Rica. In the past, Carol served as Editor in Chief of What’s on Tap magazine