IRS Can Restrict Travel

American citizens often believe they are able to leave the country and return whenever they like, but that is not actually the case. As a result of the events of 9/11, the United States has imposed significant international travel restrictions. Among the most well known issues that prevent freedom of travel are the no-fly lists. Each year, hundreds of citizens remain trapped in other countries without the ability to return to the United States as a result of such lists. No fly lists are not the only issue, however. In order to travel outside the United States, one must also be eligible for a US passport. Unfortunately, many people are not able to qualify for a US passport because they have been ordered by a court not to leave the country or because they are behind in child support payments.

Now, the IRS has gained access to Customs & Border Patrol databases, has the ability to red flag the names of individuals, and prevents them from leaving the United States. A new law has also been proposed that would allow the IRS to revoke the passports of any United States citizen who owes at least $50,000 in back taxes. Furthermore, the revocation can take place without the individual being charged with tax evasion.

While it would be frightening enough to have your passport confiscated and be trapped as you are about to leave for vacation to a destination outside the United States, the proposed law could also work in the reverse and you can be detained as you attempt to cross the border and re-enter the United States.

American citizens are not the only individuals being targeted. Recently, foreigners visiting the United States on a visitor's visa or other non-immigrant visa were provided with online access to their travel history for the past five years. While the move was sold as a convenience, it could very well set the stage for the IRS to learn how long visitors actually remain in the United States. This is important information as visitors who spend more than 182 days in the US during any single year or an average of 122 days per year over the course of a three-year period are actually required to file tax and information reporting returns in the United States. Reports have already been issued that some non-resident, non-immigrant foreign nationals have been detained at the border due to taxes that the IRS alleges they owe.

One such instance involves snowbirds from Canada who frequently visit warmer climate states in the US during the winter months. The IRS is now using the C&BP databases in order to track the number of days that such visitors remain in the US. Due to the foreign tax credit, such Canadian visitors often do not owe any taxes in the US, but accidentally overstaying one day could still result in a fine amounting to $10,000. With an increasing number of US citizens opting to spend extended vacation time or split the year between the US and Costa Rica, this could also be a concern.

Ultimately, non-citizens and US citizens should ensure they handle their filing, reporting, and tax obligations or they may find themselves facing issues when attempting to cross a US border.