Did you know the U.S. Government will be able to deny new, or revoke current, passports of people with serious tax debts?

2015-11-23T20:27:18-05:00

Congress is poised to enact a law denying or revoking passports for U.S. citizens who haven’t paid their taxes.

Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.

The rule has been passed in similar versions by both the House of Representatives and the Senate. It is part of a highway-funding bill, H.R. 22, that is before a conference committee. Congress is expected to pass it in early December.

In most cases, the passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn’t apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court, said David Kautter, a partner at the accounting firm RSM in Washington.

However, the State Department could issue a passport in an emergency or for “humanitarian reasons.” Neither the State Department or Treasury Department would comment while the legislation is pending.

If enacted in current form, the law would take effect on Jan. 1 and would apply to existing tax debts. According to estimates by the Joint Committee on Taxation, the measure is expected to raise $398 million over 10 years.

“If this bill becomes law, it will be imperative for Americans traveling abroad or living abroad to pay attention to IRS notices—assuming they receive them,” said Mr. Kautter.

It’s unclear how many people would be affected. The provision’s most vocal critics are advocates for the some 7 million U.S. citizens living overseas, who need their passports for many purposes, including for work visas or residency permits, and who may not be receiving mail from the IRS.

“Americans abroad need their passports for many routine activities of daily life, such as banking, registering in a hotel, or registering a child for school, and mistakes could be disastrous,” said Charles Bruce, an American lawyer with Bonnard Lawson in Lausanne, Switzerland, who advises American Citizens Abroad, an expatriate group.

Mr. Bruce noted that a report issued in September by the Treasury Inspector General for Tax Administration, or Tigta, a watchdog agency, found that the IRS sent 855,000 notices to U.S. citizens abroad in 2014. According to the report, “IRS data systems aren’t designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.”

The Tigta report said that “current IRS processes for addressing international mail issues are ineffective or nonexistent.” In response, the IRS said that Tigta’s recommendations wouldn’t overcome the agency’s “budgetary, statutory, and operational constraints.”

Americans: Pay Your Taxes--Or Lose Your Passport

Under a new law expected to take effect in January, the State Department will block Americans with serious tax debt from receiving new passports and will be able to rescind existing passports.

Response by MAJ David Vermillion made Nov 23 at 2015 8:28 PM

2015-11-23T20:28:35-05:00

Great comment.

Response by CPO Andy Carrillo, MS made Nov 23 at 2015 8:39 PM

2015-11-23T20:39:30-05:00

Wait, if you have Irish ancestry you are eligible for an Irish passport:
http://internationalliving.com/2013/11/irish-passports-one-buy-one-may-entitled/

It's easier, however, simply to have a good CPA to minimize one's tax liability rather than evade paying taxes.

Irish Passports – One to Buy; One You May Be Entitled To

Irish Passports – One to Buy; One You May Be Entitled To Ireland is the land of literary giants James Joyce and W.B. Yeats.

Response by SFC Private RallyPoint Member made Nov 23 at 2015 8:49 PM

2015-11-23T20:49:20-05:00

Maybe just pay your taxes. It's a fairly trivial annual task.

Response by SP5 Mark Kuzinski made Nov 23 at 2015 9:18 PM

2015-11-23T21:18:13-05:00

As they should!

Response by PO1 William "Chip" Nagel made Nov 23 at 2015 9:19 PM

2015-11-23T21:19:25-05:00

Works for me. Great Idea. Why should the Gov't make it easier for you to jump ship if you owe them money. Too bad we can't do that with Corporations!

Response by MAJ Ron Peery made Nov 23 at 2015 11:51 PM

2015-11-23T23:51:50-05:00

I don't suppose Charlie Wrangel or Al Sharpton will be penalized this way. Under Obama, the law does not apply equally to all.

Response by COL Ted Mc made Nov 24 at 2015 3:24 AM

2015-11-24T03:24:27-05:00

MSgt Curtis Ellis - Master Sergeant; Could you please explain to me how "passports" and "highway funding" are even remotely related?

PS - The US government will not be able to deny Americans the right to return to the US (and, in fact, won't be able to deny them the right to leave the US either [you don't need a US passport to leave the US - only to enter some {OK a whole lot of} other countries - but that requirement is a requirement of those other countries and the US government can't impose it])

Response by PO3 Private RallyPoint Member made Nov 24 at 2015 7:28 AM

2015-11-24T07:28:03-05:00

I see that coming .... that is why I get my passport "FAST".