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Trump's next travel ban will affect millions of American expats

14 February, 2017

While President Trump's executive order blocking travel from 7 high risk countries makes it's way through our courts, there's a much larger travel ban looming on the horizon. This one will affect up to 16 million American citizens, many of them expats.

The next Trump travel ban will target Americans living and working abroad. And, rather than preventing foreigners from entering the country, this one will force citizens back into the country or prevent them from traveling abroad.

Trump's new travel ban is sure to dwarf the current controversy, become the largest travel ban since World War II, be the first in US history that forces expats back into the country, and is set to begin in early 2017.

Here's what's going on with Trump's next travel ban...

A little over a year ago, Congress passed H.R.22 allowing the IRS to revoke or refuse to renew passports of Americans who owe back taxes. IRC Section 7345, "Revocation or Denial of Passport in Case of Certain Tax Delinquencies," was added to the tax code, with enforcement to begin in early 2017.

According to an article on the IRS website, which was posted January 25, 2017, revocations and passport renewal rejections will begin in early 2017 for those who owe $50,000 or more, including taxes, interest and penalties.

As of 2013, the most recent data available, about 16 million Americans owe money to the IRS. We don't know how many of these owe more than $50,000, but can assume it is in the millions. It will certainly dwarf the 100,000 US visa holders affected by the 7 country travel ban.

When these refusals to renew and revocations begin in earnest, Trump's travel ban will affect millions of Americans, many of them expats. And it's expats who will be targeted first by the IRS.

If you're an American expat with a tax debt, there wasn't much the government could do to collect from you. If you're living and working abroad for a foreign company, the IRS can't levy your wages, seize your property, or levy your bank account, at least if you're smart.

  1. The IRS can levy a foreign bank account if your bank has a branch in the United States. So, smart expats stick to smaller local banks or offshore banks without exposure to the US. See: 10 Reasons You Want an Offshore Bank Account in 2017
  2. The IRS can levy your US retirement account. Smart expats protect their IRAs by moving them out of the United States. See: The IRS Can Seize Your IRA

Now the IRS has the ultimate weapon to force expats to file and pay their taxes. This ban will force you back into the country to face the great collector on his home turf.

And, because of FATCA, the number of expats caught in this web will be in the millions. Now that foreign banks are reporting your balances and transactions to the IRS, the government has all the information it needs to audit and certify a tax debt, allowing them to revoke your passport.

The same goes for American expats who have not filed their returns. FATCA gives the IRS computers enough data to prepare "substitute returns" on your behalf. They'll assume all deposits are income, deny you the FEIE and foreign tax credit, and create a tax debt out of thin air... which will be used to revoke your passport.

Another reason American expats will be hit the hardest by this new travel ban are the ridiculous penalties associated with international tax returns. Failing to file an FBAR and a corporate return can result in a minimum combined penalty of $20,000 per year. Compliance penalties, in addition to tax, interest, and standard penalties, will put most expats over $50,000 very quickly.

Also, expats have a lot of risk with the FEIE. For example, you can lose the Foreign Earned Income Exclusion in it's entirety if you're using the physical presence test and miss your 330 days by even one day.

Likewise, if you fail to file, and are audited, you can lose your right to take the FEIE. The FEIE is the only "use it or lose it" exclusion in the US tax code.

For all of these reasons, US expats are more likely to owe $50,000+ to the IRS. And we'll feel the pain of having our passports revoked or refused far more than most.

Here's what will happen if your passport is revoked or your renewal is refused...

If you lose your only passport while living abroad as a tourist or perpetual traveler, you're hit. You'll eventually overstay your visa and be forced out of the country. Because you don't have a valid travel document, your only option will to return to the United States. No country will let you in, or extend your visa, without a valid passport.

If you're traveling away from your home base when your passport is revoked, you're in for a world of hurt. You'll be denied entry at your destination and placed on the next flight back to the United States. You won't be allowed to return to your starting point, nor do you have the right to an attorney or to file an appeal.

Because you're not being extradited for a crime, you have no rights. Extradition rules only apply to those already admitted to a country. If your passport is revoked while traveling, you're being denied entry, not kicked out, and thus have no rights.

Your only option is to be forcibly returned to the country that issued your passport.

Of course, this assumes you have only one passport. If you have a multiple passports, you can chose to return to the US or any country where you're a citizen.

Here are your options to protect yourself against Trump's next travel ban...

Here are the options for expats who owe the IRS:

  1. Render unto Caesar,
  2. Get a second citizenship and passport as quickly as possible, or
  3. Get a second permanent residency in a country where you want to live that will lead to citizenship.

If your only passport is revoked, you won't get another until your debt is paid in full. Your only choice is to pay unto Caesar what he demands. If you can't pay the tax bill immediately, you'll be stuck in the United States for years until it's paid off.

This next travel ban only applies to US citizens with one passport. If you have a quality second passport, you can stay out of the US as long as you like. The government can't force you to return.

The same goes for citizens living America. If you lose your only passport, you're locked into the United States. If you have a second passport, you can leave at any time.

That is all to say, Trump's travel ban applies to those who don't have a second passport. The government doesn't have a right to jail you for owing the IRS (at least, not yet). But, a passport is a privilege and not a right. It can be taken away from you for any reason.

If you don't have a second passport, you're at the mercy of the government who issues your only travel document. If you have two or three passports, you have options. You can leave the United States and travel to any country your passport gives you visa free access too.

But a second passport is expensive. The most popular program in 2017 is St. Lucia, which gives you visa free access to 125 countries and costs about $130,000 for a single applicant.

If you want the best second passport, look to the European island of Malta. A passport from Malta gives you visa free into the United States, Canada, and 168 countries in total. It's the best passport available if you have $1.2 million to invest, not including legal fees.

Don't have the cash for a second passport? The next best thing is a second residency. Become a permanent legal resident so you can't be kicked out and forced to return to the United States.

Warning: You'll need to complete the residency or second passport process before you lose your US passport. You must have a valid passport to file for citizenship or residency in any country.

You'll also need to be a permanent resident before losing your US passport. Most countries give you a few months, or a year or two, of temporary residency before granting permanent residency. If you lose your passport as a temporary resident, you will eventually be removed from the country and won't qualify for permanent residency.

Residency also allows you to avoid the risks associated with the physical presence test and the Foreign Earned Income Exclusion I mentioned above. It's much easier to qualify for the Foreign Earned Income Exclusion using the residency test rather than the physical presence / 330 day test.

If you're already living abroad, you may be able to apply for residency from your current home base. If that's difficult, or you don't have a home base, then think about residency in Nicaragua or Panama.

Nicaragua is the fastest permanent residency visa. If you invest $30,000 in their reforestation program, you'll have your permanent residency in about 90 days. You can apply for a second passport and citizenship after 2 years of residency.

The catch is that you must spend 6 months during each of these two years in Nicaragua. So, you need to be in the country 12 of the 24 months of your residency. Once you have your passport, you can spend as much or as little time in the country as you like. For more, see: the fastest low cost second passport.

The easiest residency program is the Panama friendly nations reforestation visa. You invest $20,000 and get temporary residency in about 90 days. After about 3 years you will get permanent residency and after 5 years you can apply for citizenship. This program is only available to US citizens and those from a top 50 country. For more, see: Best Panama Residency by Investment Program

Panama doesn't have a physical presence requirement like Nicaragua, though I suggest you visit once a year to keep up appearances. The risk is that you'll lose your US passport while on temporary resident status. If that happens, you'll eventually be removed from the country and your visa cancelled.


The next Trump travel ban will affect millions of Americans, especially those living, working, or retired abroad. If you owe the IRS, haven't filed your tax returns for a few years, or are at risk of being caught up in a tax dispute, you need to take action immediately. Either pay up or protect yourself with a second passport or second residency.

I hope you've found this article on how Trump's next travel ban will affect millions of American expats to be helpful. For more information on US tax compliance, to negotiate a settlement or Offer in Compromise with the IRS, or to secure a second passport or second residency, please contact me at info@premieroffshore.com or call us at (619) 550-2743. All consultations are free and confidential.

About the Author


Premier Offshore Tax & Corporate, Inc. is a leader in international consulting, planning and incorporation services for offshore investors, entrepreneurs, asset protection, and U.S. retirement accounts. We are the only international incorporator that offers U.S. tax compliance. Premier has served thousands of business people, attorneys, accountants, physicians and expats. premieroffshore.com


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