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U.S. Passports May Now Be Revoked or Denied in Case of Certain Unpaid Taxes

Leslie A. Share
On Dec. 4, 2015, President Obama signed the Fixing America’s Surface Transportation Act (H.R. 22). Current law allows the State Department to refuse to issue or renew a passport if the applicant owes child support in excess of $2,500 or owes certain types of federal debts. The law does not extend to the rejection or revocation of a passport on the basis of delinquent federal taxes. The new law requires the Secretary of State to deny a passport (or renewal) and revoke an existing passport to a person certified by the IRS that has a “seriously delinquent tax debt.” Limited sharing of information between the Treasury and State Departments, including who has serious delinquent federal tax debts, would be permitted to accomplish this.

A seriously delinquent tax debt would be defined as any outstanding debt being assessed in excess of $50,000 (to be adjusted for inflation), for which a notice of lien has been filed and administrative with respect to such filing have been exhausted or have lapsed or a levy is made. Despite reaching the threshold amount, such debt may not be seriously delinquent if (1) the debt is being paid in a timely manner pursuant to an installment agreement or offer-in-compromise, or (2) collection action is suspended because a collection due process hearing or innocent spouse relief has been requested or is pending. The Secretary of State may issue or renew a passport for humanitarian or emergency reasons despite the applicant having a seriously delinquent tax debt.

Similar requirements would be in place for an applicant that fails to provide a social security number or provides an incorrect or invalid number, but only if the incorrect or invalid number was provided willfully, intentionally, recklessly or negligently. Exceptions for humanitarian or emergency purposes is allowed.

There will be IRS procedures to reverse such determination, including the timing of such notice to the Secretary of the Treasury. It also requires the affected individual to be notified of the certification or reversal of having a seriously delinquent tax debt. Such individual would also be given the right of judicial review in a federal district court or the Tax Court to determine the validity of the certification.

Potentially affected individuals should contact a knowledgeable professional to consider how to proceed.


Revised IRS Rules Require Reporting of Interest Payments to Certain Nonresident Aliens

On April 19th, the Internal Revenue Service (IRS) issued revised Rev. Proc. 2015-50 in connection with information reporting on U.S. bank deposit interest paid to nonresident alien individuals who are residents of any foreign country with which the U.S. has either an income tax treaty or tax information exchange agreement. These rules (which updated the prior 2012 and 2014 versions)  are part of the IRS’ effort to combat international tax evasion through the U.S. tax treaty network and to encourage other countries to assist in the implementation of the Foreign Account Tax Compliance Act (FATCA) enacted as part of the 2010 Hiring Incentives to Restore Employment (HIRE) Act.

In essence. interest aggregating $10 or more paid by U.S. offices of financial institutions to certain nonresident alien individuals is generally subject to reporting by the payor on Form 1042-S, “Foreign Person’s U.S. Source Income Subject to Withholding,” for the calendar year in which the interest is paid.

The revised rules now provide for “automatic” information exchanges between the U.S. and the following countries: Australia, Brazil, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Netherlands, New Zealand, Norway, Poland, Slovenia, South Africa, Spain, Sweden, and the United Kingdom.

For more information, please contact Leslie A. Share, Dennis Ginsburg, Jose Nuñez, Shawn P. Wolf or Todd Rosenberg


Disclosure Program (“OVDP”) for taxpayers with certain undisclosed offshore assets.  

Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.

Participants face a 27.5% penalty, but taxpayers in limited situations can qualify for a 5% percent penalty. Smaller offshore accounts will face a 12.5% penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP will qualify for this lower rate. As under the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined.

For additional information, contact Leslie A. Share, Dennis Ginsburg, Shawn P. Wolf, or Eric Satin.

Articles

Identifying and Reporting the Proper Taxpayer in International Structures

“Preserving the Community Property Character of Marital Assets When Moving To The United States”

“Proposed Legislation Once Again Seeks to Alter the United States Expatriation Rules”

“Foreign Spousal Rights and Investment in the United States”

“Are You Contemplating U.S. Income Tax Residency Status?  If so, Plan Accordingly”

“U.S. Income Tax Withholding and Beneficial Ownership,”  Caribbean Today, June 2007

The Impact Of An Installment Sale And The Potential Branch Profits Tax Liability For Any Foreign Corporation Doing Business In The U.S. 

Foreign Life Insurance Trusts – More Bang for the U.S. Buck?

Taxation of the Internet–A Work in Progress That Doesn’t Yet Work

Irrevocable Life Insurance Trusts Have Potential Tax and Estate Planning Benefits

Final Domestic v. Foreign Trust Status Regulations Include Significant Changes

The Florida Intangibles Tax–A Less Evil?

Like Kind Exchanges Can Defer Tax On U.S. Real Estate Sales

Do You Have Business Profits From a United States Permanent Establishment?

Offshore Wealth Preservation Trusts–The Anderson Case

U.S. Tax Considerations of Foreign Investment in U.S. Real Estate

Speaking Engagements

2016 — Jack D. Finkelman, Esq.
Knowing Your Client’s Worksite Rights and Obligations
American Immigration Lawyers Association

January 7, 2016– Leslie A. Share, Esq.
Exceptions, Exclusions, Exchanges and Exhilaration—Planning with U.S. Transfer Tax Treaties
4th Annual International Tax Conference
Contact Arlee Colman of the Florida Bar at acolman@flabar.org

2015 — Jack D. Finkelman, Esq.
Employer Compliance – What Every Lawyer Needs to Know
American Immigration Lawyers Association

December 2, 2015– Michael Rosenberg, Esq. and Leslie A. Share, Esq.
Estate and Gift Taxation of Nonresident Aliens in the United States
Florida Institute of CPAs
Contact the Florida Institute of CPAs at cpe@ficpa.org

December 1, 2015—Michael Rosenberg, Esq. and Jose L. Nuñez, Esq.
Foreign Investment in the United States: Tax and Related Matters
Florida Institute of CPAs
Contact the Florida Institute of CPAs at cpe@ficpa.org

November 19, 2015—Leslie A. Share, Esq.
The USA v. The World—Wealth Preservation Trusts
Estate Planning Council of Greater Miami
Contact Mitchell A. Hipsman, Esq. at mah@pnrlaw.com

November 13, 2015– Leslie A. Share, Esq.
Asset Protection and Related Tax and Compliance Issues—Current Update
Alpha Kappa Psi
Contact Stephanie Ollino at cpeinfo@fgcac.com