Thunderstorm
Weather for San José:
High 28° / Low 20°
Thunderstorm
Click here for six-day forecast for 16 communities across Costa Rica!
CLICK HERE TO
SIGN UP FOR OUR FREE DAILY NEWSLETTER
BUY
541.00
SELL
553.00
BUY
584.60
SELL
614.60
BUY
406.18
SELL
430.18
Banco BAC
Banco BCR
Banco Nacional
Banco Popular
Banco Scotiabank

Americans living in Costa Rica could face yet another passport restriction

Share this article

A new bill making its way through the United States legislature may impede travel for American passport holders who owe taxes to the Internal Revenue Service (IRS).

Costa Rica’s proposed Fiscal Reform Plan, which was recently sent back to the National Assembly by Sala Cuarta (Constitutional Hall), is just one example of legislative efforts in several nations to increase revenues with the goal of alleviating serious budget deficits.

The United States is another country that is dealing with significant budget shortfalls, and the current administration and Congress are trying their best to come up with legislation that can generate higher revenues to shore up fiscal gaps. This sometimes means reaching out to Americans living abroad and employing methods to monitor their income and assets for the purpose of excising taxes.

In a previous Reader’s Mail article, the Costa Rica Star answered a question concerning the Foreign Account Tax Compliance Act (FATCA), a provision of an American law that was passed by the 111th United States Congress in the midst of the Great Recession.  Under FATCA, an American taxpayer who holds $50,000 or more in a bank account in Costa Rica is expected to report those liquid assets to the IRS. Shareholders in a Passive Foreign Investment Company that has assets deposited in Costa Rica are required to report even more information. Individuals could be subject to a 30 percent withholding tax on foreign bank accounts, and up to a 40 percent fine assessed for failing to report or trying to conceal assets.

Enter Senate Bill 1813 (Highway Trust Fund)

Here’s the summary of the pertinent portion of the new bill that could restrict travel for some Americans:

Revoke Passports of Individuals Owing More Than $50,000 in Back Taxes.
Currently the Federal government revokes passports and denies new passports to individuals who owe more than $2,500 in child support payments.  Similarly, this provision would authorize the government to deny the application for a new passport or renewal of an existing passport when the individual has $50,000 or more (indexed for inflation) of unpaid federal taxes which the IRS is collecting through enforcement action.  It would also permit the Federal government to revoke a passport upon reentry into the United States for such individuals.  This provision is estimated to raise $743 million over ten years.

Let’s say an American living in Costa Rica visits the Embassy in Pavas to request a consular service, such as a notary stamp on a Power of Attorney.  Should the consulate have access to IRS records and see that the individual owes $50,000 or more to the IRS, his or her passport could be confiscated at that point. If that American happens to be a perpetual tourist with no other identification or travel documents, such confiscation could make his or her life very complicated.

Capital Control measures on Americans living abroad (FATCA) will be implemented in 2013. Senate Bill 1813 is currently in the House of Representatives.

Print Friendly

Related Articles

Child of Family on Vacation Drowns in Costa Rica’s Caribbean Coast

A 13-year old boy on vacation in Costa Rica was knocked down by a powerful wave and dragged out to sea by [...]

Huge Turrialba Eruption Underway

By Wendy Anders What might possibly be the largest of the recent Turrialba volcano eruptions started at [...]

Growing Immigrant-Related Tensions at CR Northern Border

By Wendy Anders Eyewitness accounts in and around Peñas Blancas on Costa Rica’s northern border with [...]

Pizza, Yuca, Cocaine, and Costa Rica: Father and Son Found Guilty

This afternoon, following a two week trial, a federal jury in Brooklyn, New York, returned a guilty [...]

Recent Costa Rica Volcano Eruption Could Form New Caldera (VIDEO)

A powerful mid-afternoon eruption of the Turrialba volcano, currently the most active in Costa Rica, [...]

Regl Sea Commerce Expands with Ferry Between CR and El Salvador

By Wendy Anders The Central American business magazine, Revista Mercados y Tendencias, reported July 19 [...]

U.S. College Students Learn About Biodiversity in Costa Rica

In the wee hours of May 22, 13 Eastern biology students and biology professors Patricia Szczys and [...]

Scientists Explain Why Sloths Are So Slothful in Costa Rica

Although most of the terrestrial world is covered in trees, there are precious few vertebrates that make [...]