As a taxpayer who resides outside the United States, you may not be aware of outstanding federal tax liabilities or a tax lien – especially if the address on record for you is outdated or otherwise incorrect. Heck, you may not even have filed a tax return, but the IRS filed one on your behalf (known as a substitute tax return that is filed based on information reported by third parties, such as employers, banks, brokers, etc).
What you may not know is that the IRS has established procedures to facilitate tax collection from taxpayers who live outside the United States. For taxpayers that have an unpaid tax liability and have been issued a Notice of Federal Tax Lien, the IRS may submit your information to the Treasury Enforcement Communications System (TECS). The Treasury Enforcement Communications System (TECS) is a database maintained by the Department of Homeland Security (DHS), and it is used extensively by the law enforcement community. It contains information about individuals and businesses suspected of, or involved in, violations of federal law (please note that not filing a tax return is considered a criminal offense). TECS can provide useful information about taxpayers so DHS and IRS employees can attempt taxpayer contact or locate asset information (Internal Revenue Manual (IRM) §22.214.171.124).
Revenue officers can request that delinquent balance due taxpayers be entered into TECS, and the IRS will then receive information when those taxpayers travel into the United States for business, employment, or personal reasons. And that’s not all… The Department of Homeland Security (DHS) requests that IRS employees not discuss the Treasury Enforcement Communications System (TECS) with taxpayers.
The taxpayers in TECS are primarily International taxpayers because the cases usually concern persons who reside abroad – US Expat taxes are of special attention in this administration. Taxpayers placed on TECS are often not subject to ordinary administrative and judicial collection procedures because they frequently reside outside the jurisdiction of the US Courts. Information derived from placing a taxpayer on TECS can facilitate contact with these taxpayers or provide asset information which, in turn, may facilitate collection of their delinquent liabilities.
What do you need to know? You need to know about how this facilitates the collection of delinquent liabilities from US Expats.
Collection of delinquent US Expat taxes is facilitated as follows – taxpayers traveling to the United States with unpaid tax assessments are increasingly being detained at the border. Subsequently:
- a Customs and Border Protection Officer may interview the taxpayer when they enter the country, to ascertain what assets they have in the United States, the duration of their trip, where they are staying, vehicle registration information, and similar information. Agents also may inquire about the taxpayer’s employment relationships in the United States or any personal services performed in the United States, to establish wage garnishment opportunities.
- the IRS may be advised of the taxpayer’s arrival, and
- the IRS may be provided with information that will enable the IRS to contact the US Expat in the region in which the taxpayer is traveling to follow up with the taxpayer.
This disclosure can have broad consequences. A withdrawal or release of the lien is required for removal of the taxpayer’s information from TECS. Thus, it can be a lengthy process to remove information from TECS and it may result in detention at the border for travelers to the United States for a period of time after the lien has been released or withdrawn.
Consequently, US Expats should ensure that the correct address is used on the tax return and, if the taxpayer is no longer is required to pay US taxes nor file U.S. returns, that the IRS still is able to contact you about previously filed returns. If you are required to file a U.S. return, by all means you should ensure that you do so. You should be advised that the failure to keep the IRS apprised of a change in mailing address may result in an unwelcome, and potentially embarrassing, surprise from the DHS when the taxpayer seeks to enter the United States through Immigration and Customs Enforcement.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.