Saturday, April 16, 2011

Forget Currency Controls - Travel Controls Are a Bigger Threat

The use and expansion of multi-agency linkage for the purpose of cross checking data is set to add another layer of surveillance over the American public. The GAO issued a report this week that suggests consideration of a program whereby citizens who are delinquent in filing or paying their taxes should be denied a passport.

Here is the recommendation in the GAO's own words,

If Congress is interested in pursuing a policy of linking federal tax debt collection to passport issuance, it may consider taking steps to enable [the] State [Dept.] to screen and prevent individuals who owe federal taxes from receiving passports.

The report was not the product of some make-work assignment intended to keep a bureau of pocket-protector-clad wonks busy. The investigation was conducted by the Forensic Audits and Investigative Service division of the GAO at the behest of certain unnamed congressional requesters.

Look for a bill to begin making its way through subcommittees and on its way to becoming law soon. The financial dire straits of the U.S. pretty much assure this will happen.

Steps to enable a variety of state and federal agencies to talk to one another and exchange data has been underway for decades and is not something new. In the '80s, the U.S. states linked their motor vehicle licensing departments. This ended the practice of scofflaw drivers skipping out on a trail of parking tickets and moving violations in state A by simply applying for a license in state B.

The GAO report, however, is far more ominous.

The report is based on data from 2008. That year, 16 million passports were issued, and over 224,000 of these individuals collectively owed the IRS $5.8 billion. The report, as you would expect, focuses on the 25 most egregious cases from which it draws its conclusions.

All 25 of the cases cited involve persons owing millions of dollars in back taxes, years of failure to file a tax return, and, in some cases, felony convictions for fraud and ongoing investigations concerning money laundering. Not exactly the profile that comes to mind of a typical Citizen Joe behind on his taxes.

And therein lies the danger. Like all government programs, once implemented, they tend to expand as the mission is redefined. And nothing redefines a mission more than one that generates fast revenue. It is not stretching the imagination too far to envision a program that initially denies passports to morph into a compliance regime that detains and restricts travelers for any tax infraction.

If you are part of the millions of U.S. taxpayers that must make quarterly estimated tax payments, you could find yourself detained when traveling internationally if the IRS decides that you are "behind" on taxes owed or if you are a little late on making your latest payment. Far-fetched? Think again.

I read an article recently, on an otherwise respectable blog, where the author suggested that the way to take away the authority of the U.S. government is to laugh at them. And he meant it literally and figuratively.

This is nothing to laugh at, I assure you. Use the "laughing strategy" during a Customs and Border Protection questioning, and you could find yourself a guest at one of the new Fusion Center bed and breakfasts.

Can't happen here? It already is. Individuals detained until the requested information or "bail" is handed over are a routine occurrence. A high-profile example was the UBS executive held in custody by U.S. tax authorities until "his status was resolved." He was prevented from leaving the country, and it was never revealed what "changed hands" to secure his release.

As has been said before, when the state criminalizes the daily activities of life or minor transgressions of the law, you live in a criminal state.

We regularly remind our subscribers of the importance of diversifying your wealth beyond the reach of a single sovereign. But having resources abroad is pointless if you can't leave your country. It has never been more important to follow the law to the letter, particularly the laws regarding banking and taxes. For many, this is no longer a DIY project. Find the right people that can keep you within the law and maintain your freedom of movement.

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