Starting in January 2018, the IRS is toughening up on taxpayers who are ‘seriously delinquent’ on tax debt by implementing new procedures that will put their passport in jeopardy. The IRS is notifying the U.S. State Department of these delinquent tax debts so that the State Department will deny the taxpayer’s passport application or renewal, and may even revoke an existing passport, according to this statement issued by the IRS on January 16, 2018,
How delinquent do you have to be to get grounded by the IRS? Generally speaking, you have to owe the IRS more than $51,000 and the IRS will have already filed a Notice of Federal Tax Lien against you. Also, there’s a period of time to challenge the Lien, and that time period has to have expired and the IRS issued a levy. So it’s unlikely that you will be caught completely off guard by your passport application being denied – the IRS will have already let you know they are pretty serious about collecting the debt.
If you think you are close to the line with the IRS, is there anything you can do to avoid putting your passport at risk? Fortunately, the answer is yes. Unfortunately, it involves working out your tax debt with the IRS and that’s never easy. But if you either pay the tax debt in full, or begin paying the debt under an installment agreement, offer-in-compromise, or settlement agreement, the IRS will not report you to the State Department. There are a few other exceptions that will stop them from reporting you, if you let them know about your situation. This includes being in bankruptcy or being a victim of tax-related identity theft. Even living somewhere that has been declared a federal disaster area may get you off the hook as far as losing your passport goes.
If you’re seriously behind on your taxes, the best thing to do is consult a qualified tax attorney as soon as possible to explore your options. Losing your passport is only one of the many bad things that can happen if you don’t get caught up, and an experienced tax lawyer can help you come up with the right plan for getting back on track.