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Have Unpaid Taxes? Your Passport Could Be Revoked

April 04, 2017

If you have more than $50,000 of federal tax debt, your passport is in danger of being revoked.

Though enacted at the end of 2015, there is a renewed push on collections for taxpayers owing significant amounts of back taxes, under IRC 7345 “Revocation or Denial of Passport in Case of Certain Tax Delinquencies”. In February, the Internal Revenue Service (IRS) announced that it will soon begin advising the U.S. State Department of U.S. citizens with seriously delinquent tax debts. This poses serious challenges for U.S. citizens who travel extensively for work or pleasure.

How much debt results in passport denial or revocation?

U.S. Persons with federal tax debts in excess of $50,000 including interest and penalties are at risk of passport denial or revocation. This means that, until their debts are resolved, U.S. citizens traveling or residing overseas may be required to return to the U.S.

How will the IRS notify offenders?

The IRS will advise the U.S. State Department of U.S. Citizens of individuals to whom this applies; it will be up to the state department to take action on denying, revoking, or limiting the individual’s passport.

Once a passport application has been denied or a passport is revoked, the Secretary of State will notify you in writing.

Any way to avoid this?

Persons affected by this ruling can potentially avoid passport revocation by:

  • Entering into an installment agreement
  • Entering into an offer-in-compromise with the IRS
  • Being granted innocent spouse relief
  • Paying back the debt in its entirety
  • Making a timely request for collection due process hearing (wherein the underlying tax liability may be challenged)

Accordingly, the State Department will hold an application for 90 days after notification of impending passport denial so that the issue may be satisfied in one of the following ways:

  1. Resolution of any erroneous certification issues
  2. Payment of the tax debt in full
  3. Reaching an agreement with the IRS on a satisfactory payment alternative

There is no grace period for resolving the debt before the state department revokes a passport.

Resolving passport issues

Alternative payment options (installment agreements) can help in situations where the balance due cannot be paid. Those taxpayers needing a passport for their job will have to pay the balance in full. The IRS will reverse the certification within 30 days of resolution of the problem.

Questions? Contact any member of our Global Tax Services Team.

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