The Internal Revenue Service (IRS) has procedures in place to assist it in collection of delinquent taxes from taxpayers who are residing overseas. If you have an unpaid tax liability and the IRS has filed a Federal Tax Lien, the IRS may submit your identifying taxpayer information to the Treasury Enforcement Communications System (“TECS”).
Treasury Enforcement Communications System
TECS is a database maintained by the Department of Homeland Security. It is used extensively by the law enforcement community and contains information about individuals and businesses suspected of, or involved in, violations of federal law. International revenue officers can request that a so-called “Customs Hold” be input into TECS for delinquent taxpayers. Once the taxpayer is on the TECS, the US Department of Homeland Security (DHS) notifies the IRS whenever the taxpayer travels into the United States. The taxpayer is then stopped at entry by Customs and Border Protection officers under what is referred to as a “Customs Hold”. TECS can provide useful information about taxpayers so the IRS can follow up on the case. Generally the Customs and Border officials will seek to ascertain what assets the taxpayer has in the United States, the duration of the trip, where the taxpayer is travelling to, where he will be staying, and similar information. The information is then passed on to the IRS so it can make contact with the taxpayer. Remember though, absent a warrant, there is no authority for Homeland Security to arrest a taxpayer under such circumstances.
Treasury Inspector General for Tax Administration Report re International Collection Efforts
The Treasury Inspector General for Tax Administration (TIGTA) issued a report on September 12 2014 (Report) concluding that the IRS must enhance its international collection efforts. Among other things, the Report evaluated the TECS and Customs Hold and determined these can be more effectively used for obtaining international tax compliance. TIGTA interviewed a judgmental sample of international revenue officers and their group managers. Many of them identified the “Customs Hold” as one of the most effective enforcement tools available to them in dealing with delinquent international taxpayers.
Procedurally Speaking – IRS and DHS Work Together
A Memorandum of Understanding between the IRS and the DHS allows Customs and Border Protection Officers to stop delinquent taxpayers identified on the TECS to collect certain information from them. A special procedure must be followed by the IRS in order to obtain DHS assistance. The general section of the Internal Revenue Manual (IRM) governs the process. Click here (See §184.108.40.206). According to the TECS Coordinator, the international revenue officer must submit a completed Form 6668, TECS Entry Request, to have a Customs Hold placed on a taxpayer. The form is sent to the group manager for a signature and e-mailed to the TECS Coordinator.
Problems and Glitches with TECS
The TECS Coordinator maintains a spreadsheet to document taxpayers added to or deleted from the TECS. Currently, however, is no requirement for the TECS Coordinator to track what is input into or deleted from the TECS. Although the TECS Coordinator has requested direct access to the TECS, the IRS is wholly dependent on the DHS to provide access because DHS owns the system. Without direct access to the TECS, there is no assurance that tax information that has been input into the system is up to date and accurate.
Since the IRS has no direct access to the TECS, this has caused problems in coordination and with regard to accuracy of data. Once a taxpayer’s information has been entered into TECS, a lengthy process may ensue to actually get that information removed even though tax compliance has been achieved! This means that detention at the US border may occur even after the tax matter has been remedied. A withdrawal or release of the lien, along with certain other formalities is required for removal of the taxpayer’s information from TECS. The time lag means detention at the border is likely for a certain time period after the IRS has withdrawn or released a lien. In addition, taxpayers who have become compliant are unnecessarily delayed by Customs and Border Protection Officers because they were not properly deleted from the TECS.
$1.1 billion in Unpaid Tax Owed by International Taxpayers
According to the spreadsheet maintained by the TECS Coordinator, there are approximately 1,700 taxpayers on the TECS with approximately $1.6 billion in delinquent tax assessments. This includes assessments of approximately $1.1 billion owed solely by international taxpayers. The IRS keeps no record of the dollars collected as a result of the Customs Holds and the subsequent interactions with the delinquent taxpayer. As a result, the actual value of the Customs Hold as an enforcement tool is not known. The TIGTA report has advised IRS to keep these records so the value of the Customs Hold can be more accurately gauged.
The IRS agreed with the TIGTA’s findings with respect to TECS. As a result, we can expect the IRS to increase its use of the “Customs Hold” tool to assist in collecting unpaid taxes from tax noncompliant expatriates traveling into the United States. It is clear that the tax compliance burden for overseas Americans (and those State-side who travel extensively) will not be easing up any day soon.
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