Owe Taxes? Why you may be denied a passport because of IRS debt or even have your passport suspended

Check to IRS for all my money

The IRS can and will deny/suspend your passport if you owe more than $50,000 in taxes.

If you owe more than $50,000 in back taxes, you could be up against more than just the Internal Revenue Service. You actually could be barred from traveling internationally, and even potentially domestically. Several years ago, Congress started having discussions about what to do to incentivize the collection of back owed taxes, while simultaneously preventing those seeking to flee the country in an attempt to avoid them. The premise behind this Passport Provision found in the recently passed FAST Act is analogous to not being able to register a motor vehicle until all local taxes are paid. Seems fair on the surface, but whether or not it truly is has been a matter of debate.

In essence, under H.R. 22 of Section 7345 of the tax code, the United States government can restrict passports and travel of those individuals in debt to the IRS of upward of $50,000 until the Internal Revenue Service gets what is owed them. This has been a hotly contested law as some argue the right to travel is a fundamental, constitutionally sanctioned right. Restrictions conjure up images of North Korea and East Berlin. That said, only those egregiously in default would suffer the consequences of the new law established late last year.

It all started with a proposal by Senator Harry Reid, a Democrat from Nevada, stating that if you owe more than $50,000 to the IRS, you should not be allowed to get or renew a passport. California Senator Barbara Boxer took Reid’s ideas and introduced Senate Bill 1813 authorizing the federal government to deny or limit passports to those seriously delinquent of a tax debt in excess of $50,000.

The bill, now law, allowed certain limitations to the government’s restrictions such as:

  • Allowing one to travel if their tax debt was being paid in a timely manner.
  • In the case of an emergency.
  • For humanitarian reasons.
Critics of the law believe it should be limited to criminal tax cases, or situations where the government fears the tax offender was attempting to flee the tax debt. As it stands, the vast majority of people can have their passport revoked merely because they owe more than $50,000 and notice of lien was filed by the IRS.

Opponents also argue it is not difficult to amass a $50,00 tax bill. Tax liens are a relatively standard method of putting debtors on notice in order to collect payment. To some, these measures seem extreme at best, and downright unconstitutional at worst.

The IRS can file a Notice of Federal Tax Lien after:The IRS can file a Notice of Federal Tax Lien after:

  • Liability is established.
  • Notice and Demand for payment was sent.
  • Payment was not made within 10 days

Proponents insist that the law gives the IRS muscle where it formerly had none. The bill, attached to the 5-year infrastructure spending Bill, was signed into law by President Obama on December 4, 2015. It added a new Section 7345 to the existing tax code entitled, “Revocation or Denial of Passport in Case of Certain Tax Delinquencies”.

The law says the government can revoke, deny or limit passports for anyone the IRS deems as having a delinquent tax debt in excess of $50,000. The details remain ambiguous, undoubtedly to be left for the courts to determine.

H.R. 22, Section 7345 (a) states:

“(a) In general.—If the Secretary receives certification by the Commissioner of Internal Revenue that an individual has a seriously delinquent tax debt, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport…”

H.R. 22, Section 7345(b) goes on to define a “seriously delinquent tax debt” as a debt exceeding $50,000 in which the Internal Revenue Service has filed a notice of federal tax lien or levy.

Considering there is talk about requiring passports for domestic travel, this law could have major impact in the future as travel would no longer be restricted internationally. Adding to this fact is that the $50,000 bar to restrictions includes penalties and interest which add up exceedingly fast.

It should be noted that the law does not extend to those contesting a tax bill with the IRS or through the courts. Contested bills are net considered debt until the matter has been settled. The law also made concessions allowing the State Department to issue a passport for emergency circumstances, for humanitarian relief, or if your debt is being paid in a timely manner established via an installment agreement. The law, however, is not limited to criminal tax cases, or where the state suspects you are fleeing a tax debt, however.

If you owe the IRS money, please seek a qualified attorney to help you address the problem as quickly as possible. The consequences could be far more than you anticipated.