Those With Substantial Tax Debt at Risk for Passport Revocation

Aug 20, 2019 | Blog

passport in purseOur tax attorneys have learned that the Internal Revenue Service–IRS–has now instituted changes, enabling the State Department to revoke passports from American travelers who owe a significant amount of back taxes. This week, the IRS stated that the government can now suspend a citizen’s passport if he or she owes more than $52,000 of outstanding tax debt. The State Department and tax collector are escalating enforcement of this act, which is referred to as the Fixing America’s Surface Transportation Act–FAST.

You might remember that we previously covered this topic in December of 2015 when people with delinquent taxes in San Francisco and the bay area were in danger of having their passports revoked.

FAST Enforcement Now Being Escalated

The enforcement effort first began for debts of over $51,000 in February, 2018. However, the higher threshold of $52,000 for 2019 is thought to reflect a yearly inflation adjustment, although this could not be confirmed by the IRS. The State Department may also revoke passports if offshore interests could be used to resolve the debt, but the taxpayer chooses not to exercise that option.

According to IRS spokeswoman, Cecelia Berreda, the IRS plans to actively refer unresolved cases to the State Department for possible future passport revocation, but that debtors are being given 30 days to respond before such action is taken.

Over Eleven Million Dollars in Back Taxes Collected

As of August 14th, 2019, 400,000 individuals were notified that their passports were at risk and told what steps must be taken to resolve the debt. The most recent figures regarding the result of these notices include a total of $11.5 million, which was collected by the IRS as of July, 2018. The IRS did not make more recent tallies available. Taxpayers who receive a letter from the State Department are encouraged to promptly contact an IRS representative or have a tax attorney contact them on their behalf to resolve any issues and avoid the potential revocation of their passport.

Possible Exemptions

Our tax attorneys note that the enforcement action does have several exemptions. For example, filers who owe amounts at or above the $52,000 threshold, but who are paying off the debt through an installment arrangement approved by the IRS are not at risk of having their passports revoked. Also not included in the enforcement action are citizens who have offers in compromise with the IRS or have had tax debt collection suspended by requesting innocent spouse relief.

Other taxpayers remaining unaffected by the new law include those who reside in a federal disaster area, those who are still working out a payment arrangement with the IRS, and victims of tax related identity theft. Certain individuals who are in the process of bankruptcy may also be exempt from the enforcement effort. Those in the military currently serving in a combat zone are not in danger of having their passports revoked because of overdue tax bills.

Filers Urged to Take Action in a Timely Manner

Individuals are cautioned not to ignore notices they receive about tax debt, and the Internal Revenue Service has offered several avenues through which debtors can satisfactorily address their tax bills. Those who may be affected by the new law are urged to contact an IRS representative as soon as possible.

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