And here I thought, in an election year, that nothing would get done. In the blink of an eye, the Senate has managed to pass a bill that does practically everything. The bill, which has the descriptive title, “Moving Ahead for Progress in the 21st Century Act” or “MAP-21″ is called, in shorthand, the “Highway Bill.” It’s about 1,865 pages long. The official summary alone is 2,650 words: by the time it was engrossed in the Senate, the bill was 317,182 words long – or about four times longer than the first Harry Potter book.
Of course, it’s not all about highways. We know how Congress loves to gunk up bills… It’s a two year, $100 billion bill, chock full of provisions which touch on highways and mandatory black boxes, Gulf Coast Restoration, Buy America provisions, National Driver Register, Sport Fish Restoration and Recreational Boating Safety, Aircraft noise abatement, IRS levies and Thrift Savings Plan Accounts – take a breath, there’s more – roll-your-own cigarette machines, clarification of tax basis of life insurance contracts, Amtrak on time performance and the Paperless Hazard Communications Pilot Program.
There’s more but that should give you the flavor of the bill. And by flavor of the bill, I mean that it’s so large and bloated that I’m pretty sure that nobody in Congress actually read it. And yet, it still passed the Senate with a 74-22 vote.
The bill was introduced by Sen. Barbara Boxer (D-CA). There were three co-sponsors: Sen. Max Baucus (D-MT); Sen. James Inhofe (R-OK) and Sen. David Vitter (R-LA). Sen. Orrin Hatch (R-UT) reportedly tried to kill it but was, sadly, not successful.
There’s so much wrong about the bill that it’s hard to pick out just one thing that deserves recognition. But not impossible. Because the one thing is horribly, horribly offensive. It’s buried near the end, at Section 40304, and is meant to amend the Tax Code to add the following:
SEC. 7345. REVOCATION OR DENIAL OF PASSPORT IN CASE OF CERTAIN TAX DELINQUENCIES.
(a) In General- If the Secretary receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 4 of the Act entitled ‘An Act to regulate the issue and validity of passports, and for other purposes’, approved July 3, 1926 (22 U.S.C. 211a et seq.), commonly known as the ‘Passport Act of 1926’.
(b) Seriously Delinquent Tax Debt- For purposes of this section, the term ‘seriously delinquent tax debt’ means an outstanding debt under this title for which a notice of lien has been filed in public records pursuant to section 6323 or a notice of levy has been filed pursuant to section 6331, except that such term does not include–
‘(1) a debt that is being paid in a timely manner pursuant to an agreement under section 6159 or 7122, and
‘(2) a debt with respect to which collection is suspended because a collection due process hearing under section 6330, or relief under subsection (b), (c), or (f) of section 6015, is requested or pending.
There are a few more paragraphs but you get the idea. It gives the government the authority to deny U.S. citizens a passport if they have a tax debt.
Let me clarify a few things for you. Liens are filed when the IRS believes that a debt might not be collectible. It doesn’t, however, mean that there is an agreement that there is a debt or that the amount in question is accurate. A lien can exist when collections are pending, when a matter is being challenged in Tax Court or when there might be confusion about a debt. And while a lien is generally reserved for tax debts greater than $25,000 (the new, kindler, gentler IRS has, in theory, extended this amount to $50,000), the IRS may – and has and does – impose a lien for smaller amounts.
Similarly, a Notice of Levy can be issued when a matter is still being contested. And a Notice of Levy can be issued for very small amounts; we’ve seen them issued for double digits.
Please don’t think that a lien or a levy is always an indication of a taxpayer shirking responsibility to pay. Just Congress thinks that.
And yes, there’s supposed to be an ‘out’ for those matters with extenuating circumstances but – how do I say this nicely? – I don’t trust the IRS to timely communicate this with the Department of State.
Oh, I didn’t get to that part yet. The IRS notifies the Department of State as to those taxpayers considered “significant” tax debtors. The Department of State then gets to exercise discretion to “limit a previously issued passport or passport card only for return travel to the United States” (other mandatory directions are spelled out in the bill).
Since there’s no actual authority for information sharing (remember how worried Congress was about doing that?), the bill would authorize the IRS to share taxpayer identity information with the Department of State “to the extent necessary.” Cause there are no privacy concerns there, right?
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.
Ah, that pesky due process. Generally, the taking or denial of a passport is a judicial matter when there is a risk of a person trying to flee the country. Not so here.
But why worry about the Constitution and fairness when there are votes to be won? Because, let’s be honest… That’s what this is about. It’s not about the fear that taxpayers are picking up and leaving the country under the cover of night to escape a tax debt even if that’s what our officials in Congress (yes, that means you, Sen. Boxer) think. Contrary to what this bill implies, we aren’t seeing long lines at the border of folks wanting to get out.
Here’s your reality check: most people who are leaving the country aren’t fleeing a tax debt with backpacks filled with diamonds – they’re leaving on business. To work. To make more money. And maybe – just maybe – that means that they will settle their tax debts. Taking away their right to work surely won’t do that.
The bottom line is that MAP-21 is a stupid, stupid bill. It’s pigheaded and wrong. And it shows a complete disregard about the reasons for the tax gap. It’s not the result of rich expats or expat-wannabes. It’s much more complicated than that. But Congress doesn’t want to hear it. They want a quick fix that makes for a soundbite during election season.
(*read with a deep voice*): Senator Boxer worked hard to keep our tax dollars from being stolen and diverted overseas.
But we know that’s not what’s really happening. And pretending that it is shows a complete lack of understanding of the problem. There’s so much wrong with our tax system – from a flawed Tax Code to collections to administration. But you know what isn’t going to make it better? Yet another layer of bureaucracy. Nobody loves bureaucracy more than Congress. And so far, that’s been working out for us… how?
Fortunately, the House hasn’t approved this version of the bill yet. It passed a separate bill related to the highway provisions. Let’s hope they show more sense than their comrades compatriots in the Senate.
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