Starting this month, the IRS may instruct the State Department to revoke the passports of U.S. taxpayers owing more than $50,000 in back taxes in San Francisco. The law even applies to U.S. citizens living outside the United States (“expats”). The San Francisco Bay Area may be hit especially hard by this law, due a large number of frequent business and non-business travelers residing in the Bay Area, as well as thousands of expats who call Bay Area home. The law will apply to “seriously delinquent tax debt” and will have some exemptions.
Seriously delinquent tax debt means an assessed tax debt over $50,000 with the IRS either filing a lien or issuing a levy to collect the balance due.
Certain exemptions may apply for taxpayers with valid IRS installment agreement or pending offer-in-compromise. Taxpayers challenging the tax debt under a very specific set of rules, may also be exempt from the revocation. Taxpayers serving in a combat zone or contingency operation may also be safe from this provision. Taxpayers may also challenge the designation in court.
Bay Area taxpayers are in danger of having their travel privileges and livelihoods seriously affected by this law and must take immediate steps to address the tax debts.