I cannot image what goes through the mind of a person wrongfully imprisoned in a foreign country. I do know what they aren’t thinking about. Taxes.
But when these United States citizens finally do get home, they must consider their tax situation. The Internal Revenue Service likely will send each a notice that they are delinquent for the tax returns not filed and taxes not paid while they were unjustly held.
That’s what Wall Street Journal reporter Evan Gershkovich, former U.S. Marine Paul Whelan, and Russian-American journalist Alsu Kurmasheva, a green card holder who works for U.S.-funded Radio Free Europe, could face.
Some Capitol Hill lawmakers are working to change, or at lease ease, that IRS tax insult that too often follows the injury such prisoners endured.
Historic prisoner exchange: The Americans were part of a historic prisoner swap with Russia, the biggest exchange between Russia and the West since the cold war, that also involved detainees from several European countries.
The U.S. trio landed at Joint Base Andrews in Maryland, just outside the national capital, late Thursday, Aug. 1, where they were greeted by their families and President Joe Biden and Vice President Kamala Harris.
At a White House announcement earlier in the day, Biden hailed all those released from Russian custody as a “a feat of diplomacy and friendship.” The former prisoners’ “brutal ordeal is over, and they are free,” Biden added.
Tax law complications: But they might not be free from tax complications.
Take the high-profile case of journalist Jason Rezaian. He was wrongfully imprisoned in Iran for 544 days, and returned to the United States in 2016 as part of a prison swap.
Rezaian subsequently got an IRS notice telling him he owed $6,000 (including penalties and interest) on taxes he wasn’t able to file while imprisoned. As the case wore own, that total ballooned to $22,000.
Ultimately, he settled the case for the original $6,000 bill.
Rezaian also mentioned his prisoner tax trouble to Sen. Chris Coons. The Democrat from Delaware was surprised. And motivated to make changes.
“He leaned forward when I finished talking, asked a question that ended in an expletive and he said, ‘This is something that I want to fix and I think my colleagues will want to fix,’” Rezaian told NPR.
In response to NPR queries, the IRS said in a statement that it will “work with the family of any individual who is being held hostage or unlawfully detained to resolve any tax issues that may arise from these heart-wrenching and unconscionable situations.”
But there are statutory limits to what the IRS can do in these cases. It doesn’t have the authority to fully forgive interest or penalties.
Enter Coons and colleagues.
Untying IRS hands on penalties and interest: On May 2, the Senate unanimously cleared the Stop Tax Penalties on American Hostages Act, introduced by Sens. Coons and Mike Rounds (R-South Dakota.
The bipartisan bill, S. 4057, would stop the IRS from imposing fines and penalties on American hostages and wrongful detainees for late tax payments while they are held abroad.
“Coming home from being held hostage or wrongfully detained abroad to find that your government has penalized you for being unable to pay your taxes is a moral outrage,” said Coons following the bill’s passage.
“Our bipartisan work over the last few years to provide commonsense relief for Americans held hostage or wrongfully detained has finally cleared the Senate,” added Rounds.
Other sponsors of the bill were Sens. Ron Wyden (D-Oregon), Thom Tillis (R-North Carolina), Ben Cardin (D-Maryland), Bill Cassidy (R-Louisiana), and Rick Scott (R-Fla.).
However, a companion House bill, H.R. 7791 sponsored by Reps Dina Titus (D-Nevada), Claudia Tenney (R-New York), Don Beyer (D-Virginia), Haley Stevens (D-Michigan), and French Hill (R-Arkansas) is still pending in the House Ways and Means Committee.
Maybe this week’s release of Gershkovich, Whelan, and Kurmasheva will spark House action and a change so that U.S. tax law will no longer penalize wrongfully incarcerated American taxpayers.
Tax Felon Friday: Obviously, all the U.S. taxpayers who, over the years, have been held, usually for political reasons, in foreign prisoners are not intentional tax scofflaws.
But since tax law forces them, at least technically and tangentially, into that category, I’ve added the taxpayers’ circumstances and efforts on Capitol Hill to change the Internal Revenue Code to the ol' blogs' special Tax Felon Friday page.
That page also is a good place to start if you want to catch up on all sorts of alleged and convicted tax miscreants.
And if you want more tax crime posts than those on the Tax Felon Friday page, notably those that were published long before I gave them a special end-of-week feature, you can peruse, what else, the tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.
You also might find these items of interest:
- IRS tax notices do's and don'ts
- Houston, we have a tax filing deadline problem
- Apollo 11 astronaut submitted an out-of-this-world travel expense form upon return from Moon trip
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