The IRS Chief Counsel’s Office has issued a Program Manager Technical Advice regarding questions about IRS activity to collect tax delinquencies from assets located outside of the U.S. While some of the Advice is fairly technical, it does provide some interesting information on what the IRS can and cannot do in this arena and some of the approaches they will take.
Some of the collection avenues the IRS may take include:
- The input of a Treasury Enforcement Communications System (TECS) Lookout Indicator. This is a mechanism to help locate a taxpayer’s location.
- Initiation of an outbound Mutual Collection Assistance Request (MCAR) to a treaty partner.
- Levy on a domestic branch of a foreign bank
- Bringing a lawsuit to repatriate assets.
- Issuance of Letter 6152, Notice of Intent to Request U.S. Department of State to Revoke Your Passport.
- Referral to U.S. Dept. of State (DOS) for passport revocation after Letter 6152 issuance.
The IRS can proceed along multiple lines at the same time, except the final item above can commence only after Letter 6152 is sent. The Advice notes that if lien or levy action has already occurred to collect a seriously delinquent tax debt under the passport revocation procedures, the IRS does not have to undertake further collection action after issuing a Letter 6152 before referring the matter to the DOS for passport revocation.
The IRS may use FATCA data from taxpayer filings to assist in locating foreign assets, but with some limitations on FATCA data obtained under a treaty.
The Advice also discusses the ability of a taxpayer to obtain information on these collection processes in discovery in a federal lawsuit or in a Freedom of Information Act (FOIA) request, and what objections to disclosure can be made by the IRS to such disclosure attempts.
Program Manager Technical Advice 2022-006