Uncle Sam is one wily fellow.
Just when you think you’ve escaped his clutches his long arm reaches out and grabs you by the scruff of the neck. If you’ve got a large tax debt, you may be subject to restrictions on your passport. For example, you may discover you can’t renew your passport or apply for a new one. A 2015 law passed by Congress, which came into force last year, requires the IRS to report those with delinquent tax debt of $52,000 or more to the State Department.
If Uncle Sam is into you that deep, the State Department is required to deny your passport application or renewal, or even revoke your current passport. But before anything so disastrous happens, the State Department will hold the deadbeat taxpayer’s application for 90 days to offer an opportunity to resolve the issue.
The IRS offers a number of options to help those affected deal with their debt. For example, the taxpayer can establish a monthly payment plan. The option also exists to come to a compromise agreement in which the IRS will accept less than the full amount owed. However, this is dependent on the taxpayer’s ability to pay. If you’re wealthy, this is an unlikely outcome.
There are a few exceptions for debtors. Taxpayers in bankruptcy, those identifying as ‘innocent spouses’ and victims of tax fraud or natural disaster are safe from having their passports yanked.
Once the debt is paid or the taxpayer has entered into an agreement with the IRS, the certification will be reversed within 30 days. If the need for a passport is urgent, it is possible to expedite the request.
For more information, please read:
IRS: No Taxes? No Passport | Wealth Management