Part I: How IRS Back Taxes Affect Passports

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A New Law Means That Delinquent Taxpayers May Lose Their Passports – 3 Part Series

The recently enacted “FAST Act”–Fixing America’s Surface Transportation–provides long-term funding for the country’s highways and other transportation projects. While an infrastructure act might not seem relevant to you, it may have a huge effect: because one clause in it may strip some American citizens of their passports.

The State Department has always had control over Americans’ passports. And the IRS of course has control over Americans’ and residents’ income taxes. Until recently, the right hand never communicated with the left hand. Privacy laws had kept the IRS from reporting delinquents to other government agencies.

But as explained in a recent article in Forbes, a provision of the “FAST Act” now requires the IRS to notify the State Department of seriously delinquent taxpayers. Once State receives this certification, then State can stop processing a person’s passport application, and it can even revoke an already issued, valid passport.

The relevant threshold for IRS debt is an amount greater than $50,000. This includes total tax liability–it isn’t broken up by year–and it isn’t only the amount owed in principle. It also includes relevant fees, penalties and interest. And it is adjusted annually, for inflation.

However, the important thing to understand is you aren’t automatically going to lose your passport simply because of a large outstanding debt to the IRS. The issue is delinquency. The certification comes into issue after a notice of a tax lien has been issued, all administrative remedies have been exhausted, and a levy has been issued. In other words, the real issue is if you owe money and haven’t done anything to resolve the situation.

As of now, the law is in place, but it doesn’t appear that State has yet acted on it. This may be because the new Secretary of State Rex Tillerson was just confirmed; the agency may have held off implementation until the new leadership was in place. Regardless, you can’t count on the agency’s inaction to continue. Instead, the better course is to understand the law and what it may mean to you.

If you or someone you know has any IRS issues exceeding $50,000, please reach out immediately. We can stay ahead of the curve by fixing your tax problem, for good. We can be reached at 720-398-6088.