In recent years, the Internal Revenue Service (IRS) has gained the authority to revoke or deny passports to individuals who owe significant amounts of unpaid taxes. This enforcement mechanism stems from the Fixing America’s Surface Transportation (FAST) Act, which allows the IRS, in partnership with the U.S. State Department, to restrict international travel for taxpayers with seriously delinquent tax debts. Optima Tax Relief reviews who is at risk of losing their passport, how the process works, and how to restore your passport if you lose it.
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What Is Seriously Delinquent Tax Debt?
The threshold for having a passport revoked or denied is currently set at $62,000 or more in unpaid taxes, penalties, and interest. This amount is adjusted for inflation, so it may increase over time. The debt must also meet certain criteria to be considered “seriously delinquent.” These include:
- A Notice of Federal Tax Lien has been filed, and all administrative remedies, such as appeals, have lapsed or been exhausted.
- A levy has been issued.
It’s important to note that not all unpaid taxes will lead to passport issues. For example, if a taxpayer is paying off their debt through an installment agreement, offers in compromise, or has requested innocent spouse relief, they will not be impacted.
How the Passport Revocation Process Works
Once the IRS determines that a taxpayer has a seriously delinquent tax debt, they send a certification to the State Department. At this point, the taxpayer’s passport can either be revoked, restricted, or their application for renewal may be denied. However, the IRS is required to send IRS Notice CP508C to the taxpayer before the certification is sent to the State Department.
If a taxpayer is planning to travel and finds out that their passport is restricted or revoked due to tax debt, they have limited options for resolution. The key ways to avoid or reverse the revocation include:
- Paying the full tax debt immediately.
- Entering into an installment agreement or paying arrangement with the IRS.
- Submitting and having an offer in compromise accepted.
- Filing a request for innocent spouse relief (if applicable).
In urgent situations, such as imminent travel, the IRS can expedite processing once a taxpayer resolves their debt or enters into a payment plan.
Exceptions and Special Considerations
Not all individuals with large tax debts are at risk of losing their passport. There are several exceptions to the rule. For example, if the taxpayer is in bankruptcy proceedings, their passport won’t be affected. Taxpayers who are victims of identity theft and have disputed their tax debt can also avoid passport revocation. Also, if the taxpayer is currently disputing their debt with the IRS or has requested innocent spouse relief, the certification may not be made. The IRS has the discretion to not certify individuals with seriously delinquent tax debt if it determines that revoking a passport would pose an undue hardship. This might apply in cases where international travel is needed for work or humanitarian reasons.
Restoring Your Passport
Once the delinquent tax situation is resolved, the IRS will decertify the taxpayer’s account, and the State Department will be notified that the taxpayer is no longer subject to passport restrictions. Typically, it can take 30 days or more for the decertification to be processed. However, if there is an urgent need for travel, the IRS can expedite the process if the taxpayer provides proof of payment or enters a payment plan.
Conclusion
The IRS’s authority to revoke or deny passports for unpaid taxes serves as a powerful enforcement tool. For those at risk, it’s important to address tax debts before they escalate to this level. Taxpayers with seriously delinquent debts can work with the IRS to resolve their issues and protect their ability to travel internationally. If you’re in this situation, consulting with a tax professional can help you navigate the complexities of tax debt and ensure your passport remains valid.
