If you owe Uncle Sam more than $50,000 in back taxes, don’t plan on fleeing the country – or taking a vacation overseas.
Tucked away in the Fixing America’s Surface Transportation (FAST) Act is a provision that allows the revocation of passports held by American taxpayers that owe more than $50,000 in delinquent federal taxes.
The $50,000 number is indexed for inflation, so it will grow over time. The threshold includes the sum of both the tax owed and the interest and penalties that have accrued on the tax debt. Once a notice of lien or levy has been issued, the Department of Treasury will certify the delinquent debt to the State Department. The State Department can then find the taxpayer ineligible to hold a U.S. passport – in other words, they can revoke an already-issued passport, deny future applications for passports, and reject renewal applications.
Legal immigrants and visa-holders have faced similar penalties for non-payment for years, as visas and green cards can be revoked for non-payment of tax debt.
To prevent revocation of travel documents, clients who are unable to pay their tax balance due in full should request an installment agreement with the IRS. Debtors who have a valid installment agreement in place – and who are complying with the payment schedule – will not be subject to revocation of their travel document.
Our firm stands ready to assist when a reversal of financial circumstances results in tax debt that exceeds our clients’ ability to pay. If you need help establishing an installment agreement with the tax authorities, don’t be embarrassed – simply let us know, and we will be happy to have a private discussion of the avenues available to help you to meet your tax obligations.