In recent years, the federal government has increased enforcement efforts to collect seriously delinquent tax debts. The IRS and Treasury Department are required to notify the State Department if an individual owes a federal tax debt of more than $62,000. This threshold includes total tax liabilities, penalties, and interest. The State Department can refuse to issue a new passport and may revoke or limit an existing one in cases of serious delinquency, preventing individuals from traveling overseas until their debts are resolved. Revoking a passport is considered a last resort to collect unpaid taxes.
The consequences of having a passport revoked due to unpaid taxes are significant. Travelers may not be able to take trips abroad until they settle their debt. Expats and those who travel for business internationally may have to return to the U.S. until their tax case is resolved. The enforcement mechanism has been in place since 2018 and is used as a way to compel individuals to pay unpaid tax levies. The IRS notifies individuals of their seriously delinquent tax debt with a notice and gives them an opportunity to resolve the issue before their passport is revoked.
The demand for international travel has increased as the Covid-19 pandemic has waned. Many Americans have applied for passports, setting a record number in fiscal 2023. Tax enforcement efforts involving passports have become more common over the past few years, with cases of passport revocation or denial becoming a significant issue for some taxpayers. Revoking a passport effectively gets individuals to contact the IRS to address their tax debt and resolve the issue.
It is important to note that revoking a passport is not the first step in collecting overdue tax debts. The IRS must have exhausted all other collection activities before resorting to revoking a passport. This could include prior notices of federal tax liens and other collection efforts. Various courts have upheld the government’s ability to revoke passports in order to collect tax debts as constitutional. The government has established legal grounds for revoking passports to collect seriously delinquent tax debts.
The State Department does not immediately revoke a passport after an individual’s tax debt is certified as seriously delinquent by the IRS. The individual will receive a notice outlining the potential implications of being classified as having a seriously delinquent tax debt. If the individual applies for a passport but does not make efforts to pay their debts, the State Department will deny and close the application. Individuals can still use an active passport, unless notified otherwise by the State Department that their passport has been revoked or limited.
In cases where debtors are caught by surprise when traveling, the IRS may have the wrong address on file and mail notices to the wrong place. The IRS sends taxpayers a Letter 6152 before revoking their passport, giving them 30 days to contact the IRS to resolve their account and avoid passport cancellation. Individuals should ensure they keep their address updated with the IRS to avoid any surprises when trying to travel. Revoking a passport due to unpaid taxes is considered a serious consequence and a last resort to collect seriously delinquent tax debts.
