The Internal Revenue Service (IRS) has several tools at its disposal that are used to collect overdue taxes. However, one of the most severe and effective measures is revoking or denying a taxpayer’s passport. You must note that if you owe the IRS more than $62,000, then you will be in the country until you have settled your debt. Learn about how this process works, why it’s used, and what you can do to avoid it.
What Is the IRS’s Passport Revocation Program?
The IRS’s passport revocation program is designed to encourage tax compliance among those who owe substantial amounts. Under the Fixing America’s Surface Transportation (FAST) Act, which was passed in 2015, the IRS has all the legal authority to give notice to the State Department when a taxpayer’s debt has exceeded $62,000, which also includes penalties as well as interest.
Immediately notified, the State Department could take action, which might include denying your passport application; they could also revoke your existing passport or limit its use.
Why Would the IRS Take Your Passport?
You might think losing your passport might seem like an extreme measure; however, the IRS will only use this as a last resort when other means of debt collection have failed. This extreme measure is aimed at pushing taxpayers who have ignored previous notices to clear their debts. This will be a strong motivation for those of you who regularly travel abroad for work or personal reasons.
How Does the Process Work?
This process all begins when the IRS has classified your tax debt as “seriously delinquent.” This means it exceeds $62,000, and it has not been resolved despite the continuous effort of the IRS to collect it. The IRS then takes a step further by sending this certification to the State Department.
At this point, the State Department might deny issuing a new passport or renewing an existing one. You should also note that, if you already have a passport, there is a high chance it may be revoked. However, the State Department generally will give you a notice before taking this step.
What Can You Do If You’re Affected?
If you happen to be in this situation, you will need to act as fast as possible. One thing you should note is that the IRS is required to notify you before they proceed to certify your debt to the State Department. This will allow you to resolve the issue. One of the basic solutions to this issue is to pay off the debt in full.
However, if that’s not possible for you, you might be able to negotiate and agree on a payment plan, or you can offer in compromise with the IRS.
Additionally, it is best to know that the IRS excludes certain tax debts from the certification process. These excluded tax debts include debts under an installment agreement or those for which a collection due process hearing is ongoing.
What if your passport has already been revoked or denied?
If you resolve the debt, you can also lift the certification, and the IRS will also send notice to the State Department within 30 days of clearing your debts. However, please note, that the process of reissuing or reinstating your passport could take some time, so it’s important to sort out this issue promptly.
