It may be news to some of my readers: US citizens with “seriously delinquent” tax debt are at risk of having US passports not renewed or revoked. In 2018, that means a total amount due greater than $51,000. The IRS was expected to begin this process in January 2018 and I’ve read somewhere that over 200,000 taxpayers are eligible(!)
Passport revocation was added to the law in 2015, long a “pet cause” of retiring Senator Hatch of Utah. If you have “seriously delinquent” debt, the IRS certifies it and puts you on a list. The IRS turns the list to the Treasury Department; the State Department is then told about you. Once on the list, State may refuse to grant a passport or renewal— or go as far as revoking one. To people that live outside the US or travel extensively, this is a huge thing. Just the prospect of having a passport taken away can chill one to the core. It may have unexpected consequences; how are you going to renew your Residente permit without a valid passport?
Conceptually this is not new. People that owe enough child support have their passports not renewed until they pay down their debt. I can only imagine what will be the next object of Congressional fancy.
It has taken almost three years for IRS, Treasury and State to figure how to implement this– particularly the process of notifying taxpayers, advising remedies and review. Persons will have a process to fight certification, including going to the Tax Court or other federal courts.
Pay attention if you owe in the neighborhood of $51,000. The trigger includes tax, penalty and interest, growing daily. It isn’t too difficult to get there. Key is to not let the number rise above $51,000. Some situations prevent certification: A payment plan; being eligible for “currently not collectible” status, filing for bankruptcy and a few other reasons, like offers in compromise, being a tax identity theft victim, or “innocent spouse” procedures.
A letter will be sent by the IRS -you guessed it- to your last known mailing address. If that address is no longer yours, you will never get notice. It is important the IRS has your current address. We can “self update” through tax returns or through change of address forms.
This stuff is heavy handed, but people don’t have to take this lying down. There are, in my opinion, several alternatives short of outright payment. But sticking one’s head on the sand is certainly not one of them.
Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the federal and state tax matters of U.S. expats in Mexico. He can be reached at firstname.lastname@example.org or Facebook: GotayTaxLawyer.