In recent years, the federal government has been increasing its enforcement of revoking passports for individuals who have “seriously delinquent tax debt.” This debt threshold is set at over $62,000 and includes federal tax liabilities, penalties, and interest. The consequences of having a seriously delinquent tax debt can be significant, as travelers may not be able to obtain a new passport or have their existing passport revoked or limited. This enforcement mechanism, which has been in place since 2018, is used as a final effort to collect unpaid tax levies.
The potential implications for individuals with seriously delinquent tax debt are vast. Travelers may be restricted from taking trips overseas until their debt is resolved. This can particularly impact expats and those who travel abroad for business, as they may have to return to the U.S. until their tax case is concluded. Revoking a passport is seen as a step of last resort by experts, as it can have a significant impact on an individual’s ability to travel internationally.
Increased Demand for Passports
The demand for passports has seen a surge in recent years, with Americans applying for a record number of passports in fiscal 2023. As travel restrictions have eased following the Covid-19 pandemic, more individuals are seeking to travel abroad. This increase in demand has also led to an uptick in tax enforcement efforts involving passports, as individuals with seriously delinquent tax debt may find their ability to travel restricted.
Collection Efforts
Tax enforcement efforts involving passports have proven to be effective in getting individuals to address their tax debts. In some cases, individuals have only discovered that their passport had been revoked when trying to travel internationally. This enforcement mechanism serves as a way to compel individuals to contact the IRS and resolve their overdue tax debts.
Revoking a passport is not the government’s first approach to collecting overdue tax debts. The IRS must have exhausted all other collection activities before resorting to revoking a passport. Various courts have upheld the government’s ability to revoke passports for tax debts as constitutional. Recent cases have set a precedent for the revocation of passports in cases of seriously delinquent tax debt, highlighting the legal basis for this enforcement mechanism.
Before revoking a passport, the IRS certifies the debt as seriously delinquent and alerts the State Department. The taxpayer is then notified of the potential implications and given the opportunity to address their debt. If an individual does not attempt to resolve their debt, their passport application may be denied or their existing passport revoked or limited. Efforts to resolve the debt may include paying the balance in full, entering into a payment plan, or making a compromise agreement with the IRS.
The federal government’s enforcement of revoking passports for seriously delinquent tax debt serves as a strong incentive for individuals to address their overdue tax liabilities. This mechanism, while stringent, is an effective way to compel individuals to cooperate with the IRS and resolve their tax debts. Travelers should be aware of the potential consequences of ignoring a big tax bill, as it can severely impact their ability to travel internationally.