The federal government is taking a harsh stance on Americans who have a “seriously delinquent tax debt.” This debt threshold is set at more than $62,000 in 2024 and includes federal tax liabilities, penalties, and interest, adjusted annually for inflation. The IRS and Treasury Department are required by law to notify the State Department about individuals who fall under this category. Once identified, the State Department may refuse to issue a new passport, or worse, revoke or limit an existing one. This enforcement mechanism, in place since 2018, is seen as a final attempt to collect unpaid taxes. The consequences of having your passport revoked are significant, as it can restrict your ability to travel abroad until the debt is resolved.
The Impact on Travelers
The repercussions of having your passport revoked can be far-reaching, especially now that travel demand is on the rise post-pandemic. Travelers may find themselves unable to take overseas trips, impacting both personal and professional travel plans. Expats living abroad or those who frequently travel for business could be forced to return to the U.S. until their tax issues are addressed. Passport revocation is considered a measure of last resort, aimed at catching the attention of individuals who have been negligent in paying their taxes. The inconvenience caused by the inability to travel internationally can be a powerful motivator for debtors to settle their tax liabilities.
Tax enforcement efforts involving passports have increased over the past few years, with more cases arising where individuals are caught off guard by the revocation of their travel document. In some instances, individuals only realize their passport has been revoked when attempting to travel, causing disruptions to their plans. The collection efforts tied to passport revocation have proven to be effective, prompting debtors to reach out to the IRS and address their outstanding tax debts. Despite the lack of annual statistics on passport revocations or denials, it is evident that the federal government is intensifying its efforts to recover unpaid taxes.
While revoking a passport is a serious consequence, it is not the first course of action taken by the IRS to collect overdue tax debts. The government must have exhausted all other collection activities before resorting to passport revocation. Various court cases have upheld the government’s authority to revoke passports as a means of collecting tax debts, emphasizing the legal precedent for such actions. Individuals who fail to respond to IRS notices or have significant unpaid tax liabilities may find themselves at risk of losing their passport privileges.
Before revoking a passport, the IRS notifies the State Department of an individual’s seriously delinquent tax debt, triggering a series of warnings and notices to the taxpayer. The State Department typically sends a notice outlining the implications of having a seriously delinquent tax debt and informs the individual of the steps they can take to address the issue. Debtors are given a chance to pay off their outstanding balance, enter into a payment plan, or make a compromise with the IRS to avoid passport cancellation. Failure to comply with these requirements could result in the denial or revocation of a passport, limiting the individual’s ability to travel internationally.
Despite the warnings and notifications sent by the IRS and the State Department, some individuals are caught off guard by passport denial while trying to travel. Issues such as outdated addresses or mail notifications sent to the wrong location can contribute to debtors being unaware of their tax liabilities. This lack of awareness can lead to significant disruptions, especially for those who rely on international travel for personal or professional reasons. The government emphasizes the importance of cooperating with the IRS and resolving tax debts promptly to avoid the inconvenience of passport revocation.
The federal government’s use of passport revocation as a tool to collect unpaid tax debts highlights the seriousness with which tax noncompliance is viewed. Travelers are advised to stay on top of their tax obligations to avoid the risk of having their passport revoked, which can have lasting consequences on their ability to travel internationally. The increasing enforcement efforts surrounding passport revocation indicate a growing emphasis on tax compliance, signaling a need for individuals to address their tax liabilities proactively.