# Department of Homeland Security and IRS



## bordercontrol

There was an article last year how the department of homeland security in the US is stopping US expats for taxes.

I haven't been back to the US for a decade. I was planning on making a trip to the US in Dec, but I haven't filed taxes since 2003 and I owe back taxes. Would I be allowed into the country? Would I be allowed to leave after my trip?

Anyone have any clue or advice much appreciated.

Journal of Accountancy

Taxpayers traveling to the United States with unpaid U.S. tax assessments can be detained at the border, questioned, and flagged for follow-up enforcement. If a taxpayer has an unpaid tax liability and is subject to a resulting Notice of Federal Tax Lien, the IRS may submit identifying taxpayer information to the Treasury Enforcement Communications System (TECS), a database maintained by the Department of Homeland Security (DHS).

The database allows the DHS to identify taxpayers with unpaid tax assessments who are traveling to the United States (Internal Revenue Manual (IRM), §5.1.12.26). 

U.S. or non-U.S. persons with an unpaid federal tax liability whom the IRS has been unable to contact may be unaware of the tax debt until they come through U.S. Customs and are detained by Immigration and Customs Enforcement (ICE). ICE agents may ask them what assets they have in the United States, the purpose and duration of their trip, where they are staying, vehicle registration information, and similar information. The agents also may inquire about a taxpayer’s employment relationships in the United States or any personal services performed in the United States, to establish wage garnishment opportunities. Thereafter, ICE agents alert an IRS coordinator and transmit this information through a referral program. Typically, an investigation request is sent to an IRS agent in the region in which the taxpayer is traveling to follow up with the taxpayer. 

To be entered into TECS, the taxpayer must live outside the United States and its commonwealths or territories (or “is about to depart to reside in a foreign country” or “travels outside the United States … on a frequent basis and [IRS agents] have not been able to contact the taxpayer”) and be subject to a filed Notice of Federal Tax Lien (IRM, §5.1.12.26.5.1). 

The IRS may file a federal tax lien on a taxpayer’s real or personal property under Sec. 6321 when the taxpayer fails to pay taxes allegedly owed after the notice-and-demand period expires. A properly filed federal tax lien publicly alerts creditors that the IRS has a priority claim against the taxpayer’s real or personal property. If the IRS files a federal tax lien in the wrong location, it will not have priority over a later purchaser, holder of a security interest, mechanic’s lien, or judgment lien creditor. 

A federal tax lien is filed in the office designated by the state where any real property owned by the taxpayer is located (Sec. 6323(f)) and is a public record. For personal property, the federal tax lien ordinarily is filed in the county in which the taxpayer resides or in any other office designated by state law. However, taxpayers who reside outside the United States are deemed to reside in Washington, D.C., for lien-filing purposes. Accordingly, the Notice of Federal Tax Lien is filed with the Recorder of Deeds for the District of Columbia (IRM, §5.17.2.3.2). 

A withdrawal or release of the lien, along with certain other prerequisites, is required for removal of the taxpayer’s information from TECS. Thus, the lengthy process may result in detention at the border for travelers to the United States for a period after the IRS has withdrawn or released a lien.

A taxpayer who resides outside the United States may not be aware of outstanding federal tax liabilities if the address on record for the taxpayer is outdated or otherwise incorrect. Consequently, tax advisers with clients who reside outside the United States should ensure that the correct address for the taxpayer is used on the client’s returns and, if the client no longer is required to file U.S. returns, that the IRS still is able to contact the taxpayer about previously filed returns. Taxpayers should be advised that a failure to keep the IRS apprised of a change in mailing address may result in an unwelcome—and potentially embarrassing—surprise when the taxpayer seeks to enter the United States.


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## Nononymous

I don't think anyone can answer your question with any degree of confidence. 

By a strict reading of that article, given that you owe money to the IRS, it appears that you could be detained and questioned upon arrival, if you were identified. As for the rest of your questions, one can only apply basic reading comprehension: nowhere does it say that you would be arrested, or prevented from entering the country, or prevented from leaving again; the only threat is that the IRS will be given information about where you are so they can get in touch with you, and potentially garnishee any US-based earnings, or put a lien on any US assets.


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## Bevdeforges

Ah, the old Journal of Accountancy! I used to get that until they started requiring you to keep up with the continuing education stuff just to stay in the AICPA. But I digress...

You say you owe money to the IRS. Is this something you have been advised of (i.e. by the IRS) or are you just assuming you owe money because you haven't been filing?

Normally the only way the Homeland Security folks could stop you at the border is if there is an IRS notice issued for you. That means that the IRS has attempted to contact you (at whatever the last address is they have on file for you) of a non-payment or an issue with a return you filed and you ignored the deadline for response. 

The chances are slim that they would stop you for simply not having filed (there are too many legitimate reasons for this) unless they have documentation of income for those periods and have attempted to notify you about your failure to file.

You have to assess your own situation. If you have financial assets in the US it's pretty easy for the IRS to seize them, whether or not they have a current address for you. (They'll let the bank or brokerage firm sort it out with you.)

But the Journal of Accountancy tends to address its articles to CPAs serving "high worth" individuals - i.e. people who actually need a CPA to handle their resources and/or taxes. 
Cheers,
Bev


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## Tmcarden

I just received a call from a gentleman who had a tax debt to the IRS while he lived overseas. He had set up a payment plan but he stopped paying because he couldn't afford 90 percent of his income going to the IRS each month. Who could? After he stopped payments the IRS agent stated they were going to refer him to the department of Homeland security which has the power to revoke passports now. 

Most of the individuals problems were based on the fact that he did not know how to properly prepare his expat returns and he entered into negotiations with the IRS without professional help. The entire process may result in him being identified as having a tax debt while he was outside of the United States and thus loosing his passport. It is not probable that you will loose your passport just because you have not filed your tax returns while living outside the country. However if the IRS has you listed as owing a tax debt they will let you back in the country but they will pull your passport and you wont get it back until the debt is satisfied.

Regards Thomas Carden <snip>


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## BBCWatcher

There are a couple steps missing. The IRS can refer cases to the U.S. Department of Justice. DOJ can then issue an arrest warrant, request extradition, etc.

If you have an outstanding arrest warrant, particularly a federal one, U.S. Customs and Border Protection (CBP) will likely welcome you into the United States (gladly) then immediately detain you, yes.

For the record, many people can afford to spend 90 percent of their incomes. Extremely wealthy people can. Once you've covered food, clothing, shelter, and various other expenses which might even still include a second yacht, a 90% payment stream is quite possible. The top marginal tax rate in the United States used to be 94% as a matter of fact. Then of course there's the question of whether that 90% is really 90%.

Anyway, the point is that a 90% figure in the abstract is entirely possible. For example, let's assume your income is $1,000,000 per year (steady), you failed to pay your 30% tax for 2 years, and you reached an agreement to pay the IRS all your back taxes without penalties or interest within one year. And there you go, you now have a 90% tax rate for one year. You keep $100,000 in the year you pay your back tax bill -- not a pauper's income! -- and most people would consider that a fantastic deal to settle a tax debt. The next year your take-home income zooms up to $700,000, as you resume normal tax payments.

And none of that narrative relied on tapping wealth, wealth that could be considerable.

Your mileage may vary, of course, but no, 90% is not automatically unusual or onerous in a tax compliance deal.


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## Bevdeforges

> Most of the individuals problems were based on the fact that he did not know how to properly prepare his expat returns and he entered into negotiations with the IRS without professional help.


This is the part I disagree with. There is a Taxpayer Advocate service available to any and all taxpayers with disputes with the IRS. And depending on the taxpayer's financial situation, professional help may not be needed at all in order to properly prepare and file returns from overseas.
Cheers,
Bev


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