IRS Gains Power to REVOKE Passports for Overdue Taxes
It might be wise to pay your overdue income taxes before packing for that European river cruise.
A new enforcement provision passed by Congress and signed into law earlier this month allows the government to revoke the passports of seriously delinquent tax scofflaws — people who owe more than $50,000 to Uncle Sam.
“You could be on your honeymoon and they could revoke your passport,” said Tom Wheelwright, a certified public accountant and chief executive officer at ProVision Wealth Strategists in Tempe, Ariz.
Some details still need to be worked out, but the new passport rule indicates the government wants to get serious about collecting unpaid tax debts. The IRS reported 12.4 million delinquent accounts owing nearly $131 billion in assessed taxes, interest and penalties in 2014.
In addition to going after delinquent taxpayers by revoking their passports, the FAST Act highway-transportation bill signed by President Obama on Dec. 4 also gives private debt collectors a shot at forcing taxpayers to make good on their debts. The act includes a mandate that the Internal Revenue Service turn over certain unpaid tax delinquencies to private debt collectors.
The passport-revoking provision allows the Department of the Treasury and the IRS to authorize the State Department to take away U.S. passports from individuals with seriously delinquent tax liabilities. That’s defined as those greater than $50,000 and for which the IRS has filed a lien or levy, according to Matthew D. Lee of law firm Blank Rome. In a blog, he described the passport-revoking provision as a “powerful tool to force tax compliance.” Affected taxpayers would receive written notice.
The State Department is now authorized to deny, revoke or limit use of a taxpayer’s U.S. passport, and it isn’t supposed to issue a passport to anyone owing that much money (with exceptions for emergencies or for humanitarian reasons). Americans out of the country when their passports are revoked may be allowed to return home.
The number of valid U.S. passports has surged in recent years, from roughly 30 million in 1995 to 126 million this year.