Episode Summary
In this episode of The Expat Files, Johnny Mueller explores the implications of HR 22, a U.S. law that allows the IRS to revoke or deny U.S. passports for individuals with serious tax delinquencies. He highlights the potential consequences for expats, especially those living in Latin America, and warns about the risks of being unable to travel internationally or facing deportation if caught without a valid passport. Johnny also shares a personal anecdote about an expat who faced significant tax debt due to an IRS error, which was compounded over time, illustrating the potential severity of the new law.
Johnny also discusses the reasons why many expats and foreigners remain in Latin America, often without proper documentation. He explains that many of these individuals fled from situations such as the Vietnam draft, and some have fallen off the radar intentionally. He notes that many have obtained second passports through the residency process, which makes them less likely to be deported. Johnny highlights the differences in immigration enforcement across Latin countries, noting that countries off the typical tourist trail have lax enforcement, allowing expats to work without permits. However, he points out that countries like Costa Rica have become stricter in recent years, especially regarding foreign workers.
In another segment, Johnny explains the process of obtaining residency in a foreign country, emphasizing the importance of preparing paperwork well in advance. He outlines the steps required, including getting a police report, having it authenticated by the state department, and sending it to a consulate for translation. He also highlights recent changes by the U.S. government that have made the process more complicated, such as requiring in-person appointments at embassies and increased costs. Johnny stresses the importance of starting the process early and having a connection with a local lawyer to avoid delays and additional expenses.
Finally, Johnny discusses the potential risks of living in the United States, including the possibility of passport revocation and travel restrictions. He emphasizes that even law-abiding citizens can face government overreach, citing examples like individuals losing their possessions due to minor infractions. He also addresses concerns about the U.S. economic collapse and the future of Social Security, explaining that expats in Latin America can continue to receive Social Security benefits, often with higher payments. Johnny reassures listeners that the U.S. dollar remains a stable currency, and that expats should be prepared for potential crises by having a Plan B.
In the final segment, Johnny explores how expats are perceived in Latin America, highlighting the general admiration for the United States despite its flaws. He explains that locals often believe in the American system and its politicians, even when faced with real crises. Johnny also notes that many Latin Americans are unaware of major U.S. financial events like the 2007-2008 crisis and the dot-com bubble. He concludes by predicting that during local financial crises, people will rush to hold U.S. dollars.
Topics
U.S. tax law and passport revocation, Implications for expats in Latin America, IRS authority and its impact on international travel, Personal anecdotes and real-world consequences, Expats in Latin America, Immigration enforcement, Costa Rica's immigration policies, IRS issues for expats, Residency and immigration processes, Residency process, U.S. government regulations, Legal assistance
Chapters
00:00:00 Opening 00:01:27 Revocation of U.S. Passports for Tax Delinquencies 00:02:20 New Law Allows IRS to Block Passports for Tax Debt 00:04:30 An Expat's Experience with an IRS Error 00:06:25 Why Expats Stay in Latin America Without Papers 00:07:43 Costa Rica's Strict Immigration Policies 00:11:19 IRS Issues and Expats 00:12:14 Johnny Mueller's Latin Insider Seminar 00:12:30 Introduction to the Residency Process 00:12:32 Timeline for Residency Application 00:12:36 Requirements for the Residency Process 00:12:41 Importance of Proper Paperwork 00:12:45 Preparing Paperwork in Advance 00:12:49 Translation and Legal Assistance 00:12:53 Timeframe for Paperwork Preparation 00:12:58 Feasibility of Completing Paperwork 00:17:57 Potential Government Overreach on Expats 00:18:55 Future of Seminars and Economic Uncertainty 00:20:15 Social Security Benefits for Expats in Latin America 00:22:38 U.S. Economic Collapse and Social Security 00:23:35 The Perception of Expats in Latin America 00:26:40 The Future of the U.S. Dollar in Latin America
Transcript
Automatically transcribed from the original recording; names and wording may contain errors.
[00:00] South of the border, down Mexico way That's where I fell in love when the stars above came up to play and now I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here. So let's get started Are you ready for a shocker? most of you listeners out there are really tuned in to the alternative media and I always seem to get a bunch of emails and Advanced warning on breaking news that doesn't hit the usual corporate controlled media sources like for example in the last few days
[00:48] I've been bombarded with emails from listeners giving me links to that breaking story on December 4th 2016 just a few days ago. That was when Obama signed into law HR 22 a five-year 305 billion dollar infrastructure spending bill to address the nation's aging and congested transportation Systems who wouldn't vote on that right? So that new bill signed into law though very expensive It seems boring and innocuous enough, huh? However buried on page 1113 of this massive bill was a landmark chapter entitled get this revocation or denial of US passports in the case of certain tax delinquencies and I'm
[01:34] Paraphrasing from an article that comments on this new law It says this section gives the IRS control over your person your right to travel your right to live work Bank invest you're right to protect your assets and conduct business outside of the US Now a few years ago on the expat files living in Latin America I mentioned that the US government tried the same thing back in 2012 It was proposed and there was resistance so it didn't pass But now as the Big Brother State gets bigger bolder all encompassing and ever more threatening and more and more Broken desperate this time Congress pulled it off its law now and now for the sad details HR 22 adds section 7345 to the Internal Revenue Code
[02:20] The new law says the State Department can revoke deny or limit passports for anyone the IRS certifies as having seriously delinquent tax debt that is in excess of 50,000 bucks now analysts interpret this to mean that the IRS can now revoke Passports if anyone owes back taxes or have unfiled returns that they think exceeds $50,000 and the thing is they don't have to prove that you owe it. They just have to say you owe it It's not like you go to tax court a judge decides you owe more than 50,000 and then block your passport Or don't renew it. The amazing thing is the IRS or the IRS computers decide
[03:05] Internally whether you owe 50,000 or more and they can if they want just put the order out and do it You think they're gonna send you a letter or an email saying they blocked your passport. No way Oh, that's not to say you don't find out about it. Eventually, you will believe me and at the most inopportune time, too and that $50,000 threshold amount includes interest and penalties now Some of you out there are painfully aware that the IRS can nail you with interest in penalties compounded That said here's a story that's close to home as luck bad Luck would have it one of my ex-bad friends told me he had an eight thousand dollar IRS debt that he was sure he didn't Know and that came out of an IRS computer Generated estimated tax form
[03:52] He didn't get the notice for three and a half years because he moved around a lot and the mail forwarding kind of sucked Meanwhile the notice or notices were in the hands of another stellar government operation the US mail So he moved a number of times was in and out of the country quite a bit enough to easily qualify for that foreign Earned income tax exemption. You do remember me talking about that expat tax exemption Don't you spoken about it a number of times in past shows don't for many years? He never had to pay a single-sentent taxes and totally legal, too But what he didn't know because he was out of the country was that some IRS computer spit out an Estimated tax bill for eight grand by mistake. He didn't know it But by the time he found out about it three and a half years later
[04:37] The interest and penalties on it pumped that mistaken bill up to 32 grand So in the end with some difficulty he was able to straighten it out But imagine if that happened now today Like he said another half a year or so of not knowing about that it would have topped 50 grand and more and surely They'd have blocked his passport. So then you might ask how do you get it unblocked? Don't ask. So what does that mean to all us expats gonna bees wannabes and regular listeners out there? Well, if you get your passport revoked and you don't have a second passport in hand You will be prevented from traveling outside the US and if you're outside the US when you get your passport revoked
[05:23] You won't even know about it Then when you try to go from one country to another as you check through the airport They'll pull you aside into one of those cubicles read you the riot act call the US Embassy and tell them you're in the country Illegally for once you're the illegal alien. How's that for irony? And in most cases you'll be deported back to the US However, if you have a second passport, then you're fine life goes on as usual In fact, you'll even be pretty safe At least for the time being if you were smart enough to get permanent or temporary Residence in that country you find yourself in if your passport gets revoked now, it's true There are lots and lots of gringles and expats living in Central and South America Whose passports are not revoked, but they've expired some of these guys have been down here 15 20 25 30 40 years
[06:14] I've run into these guys on occasion They're usually in a small town or way out in the boonies well off the gringo tourist rail Many are married to latins and have a bunch of kids and have kind of homesteaded Most of them came because they were running from something some of them even from the Vietnam draft Yep, I've met guys down here who go back that far. They just simply fell off the radar intentionally So then why haven't they been picked up and deported? Well many of them who went through the process of temporary and permanent residency have a second passport So they're not worried and the ones that haven't they're kind of stuck in the country sort of in perpetual limbo Nope, they're not gonna be picked up and deported unless they've committed or are suspected of a major crime The thing is in almost all Latin countries, especially the ones off the gringo tourist trail
[07:03] There are no immigration patrols or task forces out looking for gringles in the hinterlands that haven't got their paperwork in order If you're a good citizen or a laid-back person with a low profile, nobody cares That's not to say for example that a vindictive person couldn't call the country's immigration office and report that the gringo tenant or next-door Neighbor is without paperwork and has been living in the country for years and years hiding from something. Sure. That's possible In fact, there's one specific Latin country that happens all the time one guess Costa Rica if you remember I mentioned on a past show that Costa Rica really cracks down on Foreigners working in the country without a permit and it's very difficult to get that authorization Many hoops to jump through so Costa Rica's very strict about that yet other Latin countries off the gringo tourist trail are so lenient and
[07:57] Enforcement so non-existent that it's a joke Meaning gringos and expats who want to work mundane jobs at bars and restaurants and hotels can easily find work No permits. No permissions. It's all done with cash In fact, I could take you on a tour of dozens of towns and bring you into bars and restaurants and introduce you to gringos and Foreigners of all kinds Europeans, etc Working full and part-time jobs for cash food drinks even room and board Mostly 20 and 30 something backpacker types who liked it so much when they got here They just don't want to leave. In fact, I can't tell you how many first-world musicians I've run into working at clubs and bars in Latin America even busing tables there when they're not entertaining And you know it used to be like that in Costa Rica some 20 years ago
[08:46] But now that the gringos have invaded and tourism is their number one business They insist the tourists spend money but not work and earn money now in Costa Rica If you're caught working without a real permit issued by the government They'll assess a fine kick you out of the country and list you in their Immigration computers and files as a troublemaker and they can block you from entering the country in the future That's why if you go to a bar or a bed and breakfast or a hotel in Costa Rica get this by law they're required to post a little sign or a sticker provided by the government that says call this phone number to report employer abuses and employment anomalies gringos call it the punish your boss program because remember it's gringos and foreigners who created almost all of the mom-and-pop
[09:33] Tourism and service related businesses in Costa Rica and yes, Costa Rica is one Latin country that does have a well-staffed and well-funded Immigration labor police so note if you're a DJ on the beach at a hot go bar and some jealous or jilted Costa Ricans got it in for you. Maybe he thinks a Costa Rican should have that job Well, he knows just the phone number to call and those immigration cops will show up usually within an hour or two now in the rest Of Latin America, there are no signs and stickers and numbers to call to report immigration or so-called labor anomalies Now when I think of a labor anomaly, I'm thinking about a four-fingered guy working quality control in a glove factory But I digress as usual back to that business about getting your passport revoked or blocked because of IRS tax problems or
[10:24] Perceived IRS tax problems because you know You don't have to be in the US to have the IRS trump up charges on you You know that all you have to do is look in the papers and check the media You'll see it happens all the time and it's been proven time and time again that the IRS has faulty data faulty computer systems And if you call the IRS Q&A hotline Depending on the agent answering the phone you could get a number of different answers None of which are correct that too has been proven time and time again In fact, there's not one single person out of the tens of thousands of IRS workers who knows the IRS code in full The US tax code is over 70 000 pages now. You've heard the horror stories You've seen 20 20 and 60 minutes anything can happen with the IRS
[11:11] Witness any number of 85 year old great grandmas who've been dragged into tax court stripped of everything except their adult diapers We've all heard those stories and they're true Which is why at times are wasting and it's way overdue for you to get yourself out of o vomit land Oh, and by the way, if you think I get a certain amount of hate mail for bashing politicians Just last week one guy sent me an email saying johnny i'm surprised There's not a drone with your name on it and I replied there probably is but since I refuse to get a smartphone There's no gps coordinates to hone in on but where was I? Oh, yeah First things first as uncle sam slowly closes the barn door on its sheep You must plan now to get your permanent or temporary residency down here
[11:57] Even that's getting harder and harder and your best fast track way to do that Come down to one of my latin insider seminars and you'll find out not only how to go about doing that You'll get introduced to the right people to get you started on it immediately And my next seminar is a month away Just go to www dot the new expat dot com and click on johnny's 2016 latin seminar link And by the way, i've had a lot of inquiries from people Asking me about being able to put that residency package together when they're down at the seminar how much more time they might have to stay Beyond the seminar etc Well, the answer to that is 10 days to two weeks past the seminar Because you'll have to make a trip or two down to the immigration office when they say they're ready to see you But most importantly you have to bring the proper paperwork down with you first
[12:45] In fact, it's best to send that paperwork down a week or two before the seminar So our lawyer can have it translated into spanish and get the process moving And yes people have asked do they have time to get that paperwork together? It's about a month from the seminar Yes, you can do it In fact, i've put together a special report on exactly how to go about doing it and what you need What you have to do up in the states before you come down the whole process if you haven't seen that report In brief it goes like this first It involves getting a sheriff or a police report Then you have to have that certified by your own state's state department Bet you didn't even know your state had a state department sounds redundant, doesn't it? But then again, all governments are redundant, aren't they? So anyway, your state has a state department within it and it will authenticate documents
[13:34] Then after that the document has to go to the nearest latin country consulate of the country you plan on getting residency in And by the way, if you're interested in getting a copy of my residency report that spells all of this out completely Just send me an email Oh, and by the way, the u.s Government has thrown a recent wrench into the works that slows down the process once you get here and try to apply Yes, they're trying to make it tougher every day for people to get residency in a foreign country And that's why it's imperative to get that process started right now So then how has uncle sam made it harder in these last few months? Well, you see one of the steps to get your residency in a foreign country is to make a stop at the u.s embassy in that latin country
[14:19] And before you do that back at home in the u.s You have to have had that good conduct police report Authenticated that means in the last step in the process You've had it stamped and signed by the latin consulate of the country you wish to have your residency in Then you dhl or fedex that stuff to your lawyer in latin america Then your lawyer takes that paperwork to an official government translator and that takes a few days to translate it into spanish Which is why if you send it down ahead of time, you don't have to sit around and wait for that But you do have to come down at least once To appear at the immigration office with your paperwork and sign a few things and note There's another key piece of paperwork. You have to submit at that time Simply a certified copy of your u.s passport sounds easy, right?
[15:06] Just go down to your post office in the states and have it certified Wrong You have to have your u.s passport certified in the u.s Consulate in the country that you're going to get your residency in so for example If you're in honduras You personally have to take your u.s passport down to the u.s consulate in honduras Hand your passport over pay them 50 bucks and a couple hours later You can get your passport back and a certified copy from the embassy By the way 50 bucks is awful steep a rip-off compared to when latin's get their passport certified for only 10 bucks Now just a year ago You didn't even have to bring your passport in personally to do that You could give it to your latin lawyer and one of his assistants from his office would go down to the u.s
[15:54] Embassy and have it authenticated. They don't allow that anymore. You have to do it in person But then just about a month ago another roadblock You can no longer walk down to the u.s embassy the u.s. Consulate in the latin country you're in and say here's my 50 bucks Please give me a certified copy of my passport you extortionists Oh, you still got to give him 50 bucks All right, but guess what you can't walk in and do that anymore You got to go online and make an appointment and that appointment comes up in a week or so That said if you're coming down to guadamala salvador honduras peru, whatever to get that residency started You're going to have to wait around for a week or so just to get that required Certified copy of your passport from your own us consulate another delay tactic
[16:41] You really have to wonder what they're going to pull next In other words If you don't have a connection with a lawyer in a country that you're going to get your residency in You're going to spend an extra week and possibly an extra grand for expenses Just waiting around with your thumb up your tracero and worse the us state department never officially notified anyone of the change But you'd soon find out when you went down to the embassy and saw the notice on the door Attention kmart zombies. No more walk-ins. All appointments must now be made online or something like that So over the last few months a lot of gringos got stuck for a week or two in the country Having to pay extra expenses and changing those airline tickets and all the hassles and stress that go along with last minute changes Like that bottom line time is short. You better get going on that residency
[17:27] So once again, let me repeat you have time to get all that paperwork and stuff together and come down to my seminar Which is the second week in january now and get the main steps done for your residency again It's very apparent the u.s. Government does not want us to get residency in foreign countries. Why? That's because in many cases after about five years it leads to passport and citizenship And then after you have got that second passport, you can flip uncle sam the bird Let him revoke passports. Let him make international travel more and more difficult for us residents It won't matter to you You're a citizen of another country too And you can take that passport and travel on it if the us one gives you trouble And unfortunately, we all know of cases where straight upstanding american citizens have been screwed by the government
[18:19] So don't think because you obey all the rules and have gotten out in the hide that can't happen to you Sorry, bub A lot of guys and gals with absolutely sterling records and nothing to hide have lost everything because their names Somehow popped up on a government feces list. Maybe they own a gun. Maybe they belong to a couple of food co-ops Maybe they store too many canned goods in the basement. God forbid they collect their own rain water Or perhaps they've tossed out one too many angry tweets Guilty, huh? Oh, and by the way, i've been getting emails lately from people saying they can't make the next seminar What am I going to do another one? And yes, I probably will do another seminar in july However, the future is not looking very good They're up in the first world and if the social and economic system up there holds out for another six months
[19:07] Well, then i'll have another seminar. If not all bets are off Of course, nobody knows what's going to trigger the implosion could come out of europe Could be you'll wake up and find out every atm machine in the u.s Is shut down hack attack terrorist attack another Fukushima currency meltdown kim kardashian's butt explodes Who knows what the first domino is going to be but whatever sets it off. It's coming and it's the big one God i'm glad i'm in latin america So I do hope you're well into your own plan b and you're not just talking or daydreaming about it Okay, are you scared yet? You should be Now, how about an email? Dear johnny I was wondering if you could answer a question concerning social security A large part of the show you talk about how social security would be enough to live on if you were somewhere
[19:58] That's off the beaten path But then you mentioned many times that the economy in the us is about to collapse Also, you made mention that social security will still be there, but it does sound contrary to me Can you talk a little bit more about that? Thanks a lot johnny signed joe Near philly. Okay joe. Here's how most of us think it's gonna play out When the ovomit finally hits the fan down here. Anyway, the dollar will still be king somewhat Let me explain now remember there are hundreds of thousands of expats down here in latin america Collecting social security and a lot of them getting social security disability payments, too And by the way that disability thing is a whole other issue
[20:43] If you get disability up in the states now Don't think you can't still collect when you're down here In fact, most people tell me they get double the payment for disability than they would if they were just on social securities regular benefits That's true. If you're in the states or not now regarding people who do get social security disability down here in latin america I understand the qualification rules are slightly different than up in the states. In other words much more lax According to one expat down here who gets those benefits to qualify up in the states You have to go to a doctor and get certified disabled and return once a year at least and have that qualification verified again So then what happens if you're collecting social security disability up in the states and you decide to move out of the country
[21:28] Let's say to latin america in that case It's not necessary or even required that you go back once a year and get checked by a us doctor Turns out as long as you're out of the country you do continue to receive those payments However, if you make a trip back to the states, then it's necessary He says for you to visit a doctor in the states again for proof that you're still disabled So if you leave the country and you're getting disability, you kind of get a free pass for apparently years and years and years However, like this guy mentioned you better have a backup doctor in latin america ready and willing to produce some paperwork in english If your disability is ever questioned So then what if you're down here in latin america and your social security payments don't come or the amounts are screwed up?
[22:14] Well most long-term expats down here who are on social security Anyway, they've told me that any time they've had an issue and couldn't work it out on the social security website Or on the social security 800 hotline They just go down to the local american consulate in whatever latin country they're in turns out There's always a person there that can help with social security problems Again, that said yes The us and the first world will implode when you have multiple trillion dollar unfunded debts like the us has it can't be any other way So then as our emailer asks what's going to happen to social security then? Well, I can tell you for sure that payments will keep on coming and since down here in latin america Anyway, all local funny money currencies pesos boulevards limp eras cordobas
[23:01] Have always in the long run lost steadily against the dollar and you have to remember something very important in the eyes of latin Americans the us always was and will always be in their minds Number one the us and everything about it is the role model for all third world countries And that of course includes the us dollar and the fact is if you sit down with a bunch of latins here in latin America whether they're university graduates doctors high school graduates or shoeshine boys First of all, they just can't believe that a person would leave the us and live in latin america Because hell they're all running jumping and swimming as fast as they can to get there, right? So they like us expats, but they do think we're slightly off kilter Secondly when you start bringing up the reasons all the negatives of why you left the us
[23:49] They just don't believe it. It goes against every notion they have about the first world And get this here you left because of many reasons and they actually stick up for the us They try to defend it in your face Talk about all the things they think are great social security welfare the grand safety net the minimum hourly wage That's a daily wage for them down here Of course, they'll tell you about all the freebies they've heard about in the states too But beware if you tell your new latin neighbors that you left ovomit land because it's a fascist big brother state You'll probably never get invited to those quinceaños parties Then again, maybe that's a good thing So if you tell them the truth about the us they not only won't believe it They'll think you were the one who went off the rails
[24:34] And please don't tell them the dollar is only a worthless piece of paper unbacked by gold Now the real topper and the reason why the us dollar will always be number one in the minds of all latins They believe gringo politicians are brilliant statesmen Now unlike their own corrupt large-ass politicians, they believe us politicians can and will survive and surmount any crisis Now oddly enough if you ask a fairly bright latin person what crises and disasters american politicians have surmounted They can't seem to think of any though. Some latins will say world war one world war two vietnam What vietnam, yep, that's right latins think we won the vietnam war
[25:20] In fact, according to latins. We won every single war we've ever been in Even the one in their own backyard the war on drugs They think the us is winning that one, too Now remember I mentioned this in a past show i've never met a single latin I don't care if he's got a double doctorate or he's a shoeshine boy who knew that in 2007 or eight the us Financial system nearly collapsed completely and brought the entire world economic system down with it Not to mention I never met a latin who knew we had a dot-com bubble either nor do latins No, we had a real estate blowout and the student loan debt crisis bigger than the credit card bubble in the states They don't know what that is either never heard of it Oh, and by the way latins are starting to pick up on the fact that if they get residency in the states
[26:07] They too can get tens of thousands of dollars worth of free school loans So latins believe all the misinformation and tripe coming out of the first world media They don't believe for a second that the international finance system's on the edge of collapse They have no idea that back in 2007 and 2008 the us congress passed a law to bail out all those too big to fails So if you mentioned qe one two or three even to the well above average latin person He thinks you're talking about a smartphone app or queen elizabeth So bottom line the us and the us dollar are held in such high esteem here in latin america When that big first world financial crisis does hit I really do believe there will be a rush Into dollars down here because history shows that every local or nationwide latin financial crisis
[27:00] Like for example, venezuela, argentina, whatever when they implode and they do on a somewhat cyclical Basis their citizens rapidly dump their own funny money and rush into dollars Many of us long-term expats have been at ground zero when these economic disasters happen Which is why most of us predict that's what's going to happen again The locals will dump their money and rush into dollars at least at first So we believe the dollar will prevail down here sure. It'll lose some of its value But the local funny money is going to get creamed South of the border You've been listening to the expat files living in latin america coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com
[27:46] And if you want me to help you sort out your own latin american plans schedule a one-on-one consult with me Just send an email and let me know at the expat files at gmail.com