Seeing the World, Stiffing Uncle Sam
Certain jet-setting gamblers, Ponzi schemers, executives, doctors and lawyers have something in common: multi-million-dollar tax debts to the U.S. government and U.S. passports that enable their travel around the globe.
A report out this week, prepared at my request with a fellow senator, offered just a snapshot of the link between high levels of tax debt and passport holder-ship. The nonpartisan Government Accountability Office found that the State Department issued passports to more than 224,000 individuals who together owed more than $5.8 billion in known unpaid federal taxes as of September 30, 2008. Those numbers represent the passports issued in just one year.
Among those who owe taxes and hold passports are: a gambler and former partial owner of a professional sports team who owes $46.6 million in taxes; a convicted bank fraud criminal who owns a high-rise condominium overlooking a beach and travels extensively to spots including the Bahamas, Italy, and France, who owes $39.9 million in taxes; and a former Ponzi schemer who travels regularly to Mexico and owes $1.8 million in taxes.
Some Americans can’t renew their driver’s license if they have outstanding parking tickets, so this discrepancy might be irksome to them, especially when we’re all facing the federal tax filing deadline this month.
The question for Congress is whether to link owing taxes with getting a U.S. passport. Under current law, the State Department isn’t required to restrict the issuance of passports to individuals because they owe federal taxes. In addition, federal tax law does not permit the IRS to disclose taxpayer information, including unpaid federal taxes, to the State Department unless the taxpayer consents. In contrast, federal law permits certain restrictions on the issuance of passports to individuals, such as individuals’ owing child support debts of more than $2,500 or certain debts to the State Department.
It’s disturbing to see jet-setters getting U.S. passports when they owe millions of dollars in taxes. At the same time, there’s a longstanding precedent of taxpayer privacy and freedom to travel that Congress would need to study carefully before changing. Getting a U.S. passport is a privilege but tax privacy has to be protected because tax information has been abused in the past. This country can’t regress to the days of political figures using tax information to spy on their enemies. That’s why the bar is high to change anything affecting individual taxpayer information. Legislation would be necessary to allow the IRS to share information with the State Department about whether passport applicants owe taxes. State Department rules and regulations also would need to be changed to restrict the issuance of passports because of outstanding tax debts.
The amount of outstanding federal tax that taxpayers owe, clear and without dispute, is $330 billion. I’ve said time and time again that taxpayers should pay what they owe – not a penny more, not a penny less. The vast majority of Americans meet their obligations every April 15, as law-abiding, contributing members of society. So it’s fair to consider whether those who willfully flout their U.S. tax bills and enjoy travel with the protection and ease conferred by a U.S. passport should have their wings clipped and if so, how, as a means of ensuring fairness for all taxpayers.