Tax debt can impact nearly every facet of daily life. Unfortunately, the problems don’t end with incessant demand letters, levies, or even liens. If necessary, the IRS will take action to prevent you from using your passport. While the agency can’t outright take your passport away, it can direct appropriate parties to do so. Read on to learn more about the IRS and its role in passport removal.
When Did Passports Begin Playing Into IRS Strategy?
Revocation on behalf of the State Department was first allowed through Internal Revenue Code (IRC) section 7345 when the Fixing America’s Surface Transportation (FAST) Act passed in 2015. Until recently, however, the IRS didn’t actively enforce IRC section 7345, largely due to questions regarding how passport denial or revocation might work.
Skeptics previously worried about IRS interactions with the State Department and the use of discretion in removing passports. These questions are now resolved through Notice 2018-01. Now that official procedures are in place, passport denial and removal could occur with alarming frequency.
Directing the State Department
If you owe significant back taxes, the IRS can order the State Department to remove your passport. This drastic measure typically only targets those with seriously delinquent debt exceeding $50,000. Unfortunately, that $50,000 figure takes penalties and interest into account. Hence, tax debt that seems far lower than $50,000 could be enough to warrant passport removal.
How Can I Keep My Passport?
If you owe the IRS over $50,000 and are seriously behind on your debt, it’s not too late to protect your passport. Your best bet? An installment agreement. As long as you make payments on time, the IRS will not deem your debt ‘seriously delinquent.’
Another excellent option: an offer in compromise. If accepted by the IRS, the remainder of the debt will be forgiven, and you’ll be allowed to keep your passport.
As a taxpayer with serious debt, all hope is not lost. By working with the trusted team at Highland Tax Resolution, you could potentially avoid passport removal and other harsh consequences. Reach out today at 720-398-6088 to learn how we can help.