4 Ways Your Passport Can Be Revoked.
The other day I received an email from a friend who works with high-net-worth Americans wanting to set up foreign legal structures to protect their assets. It was a sad and alarming tale about a client of his named Charles (not his real name).
Charles is a successful businessperson. He’s also prone to taking bad advice when it comes to managing his tax obligations. For years he had used a strategy recommended by an accountant to minimize business and personal taxes.
Out of the blue, the IRS audited him and demanded back taxes, penalties, and interest in the tens of thousands of dollars. The accountant stopped taking his calls.
Charles tried to negotiate with the IRS in good faith. But the agency was so understaffed and disorganized that it repeatedly lost his correspondence and failed to keep track of the negotiations to resolve the situation. They even sent a Notice of Deficiency, requiring a response within 90 days, to the wrong address.
One day, he tried to cross the U.S. border between Detroit and Windsor, Ontario by car. He’d been doing this for decades. This time, however, a Customs and Border Patrol official asked him to pull over and come into their office.
A senior CBP agent asked him to hand over his passport. Charles assumed it was a routine check. Instead, the agent put it in a wall safe and told Charles that the State Department had revoked it. He couldn’t explain why.
After several weeks, and prodding by an expensive attorney, he learned the reason.
Even though Charles was negotiating with the IRS in good faith, someone at the agency decided that he was uncooperative—apparently because he’d never responded to the Notice of Deficiency. They filed an IRC 7345 request with the State Department to revoke his passport, which was approved as a matter of routine. Charles was never notified.
“Seriously delinquent” taxes—specifically, any amount above $52,000—aren’t the only reason your U.S. passport can be revoked. It can happen if a court has ordered you to stay in the country, if another country has requested your extradition, or if you owe more than $2,500 in delinquent child support payments.
Oh, and if you’re the spouse of someone in this situation, your passport can be revoked too… even if you had nothing to do with any of it.
All this is possible because your U.S. passport isn’t yours. It’s the property of the federal government. And if the feds want it back, there’s nothing you can do about it.
Confiscation and revocation aren’t the only dangers of having only one passport.
During the first year of the COVID pandemic, the U.S. government tried to contain the virus by closing its borders. At first, this restricted inbound travelers, especially those coming from China. But the closures were soon extended to outbound travelers to Europe and most other countries.
Millions of Americans with legitimate reasons to travel to other countries were unable to do so. This included Americans with second homes abroad, students studying at foreign universities… even the spouses, life partners, parents, and children of foreign citizens. All were trapped in the United States.
Although I’m a U.S. citizen, I wasn’t trapped. Although we elected to remain in the U.S., my family and I were perfectly entitled to travel to South Africa, where we are also citizens. It wouldn’t have been easy, given the shutdown in air travel, but it was certainly doable.
I recently interviewed a U.S. citizen on a mission to acquire several foreign passports. The spark that set him on this quest started during COVID.
He’d been living and working abroad for over a decade. When COVID hit, he happened to be in the U.S. But his business was based abroad. It was the type of work that could have continued during COVID, but he needed to be there to keep it going. Unable to return to it, he lost everything.
The experience taught him an important lesson. If you’re going to be engaged in a foreign country, whether for personal or professional reasons, one of the first things on your agenda should be to apply for citizenship. Not only is it the right thing to do… it’s an essential Plan B to have in today’s world.
The fact is that things are getting crazier and crazier as time goes by. As I write this, there is a real possibility that pointless partisanship in the U.S. will crash the global financial system and potentially destroy the country’s financial reputation forever. Who knows what the outcome could be for folks like you and me?
Maybe—hopefully—reason will prevail. Irrespective, take this as your signal to start your quest for a passport that the U.S. government can’t ever take away from you.
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