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When Does My Tax Debt Affect My Passport?

Can I Lose My Passport If I Owe the IRS?

A passport and a drivers’ license have a lot in common. Both allow people to travel, and both can be suspended for non-travel reasons. Most states suspend drivers’ licenses for unpaid child support. Eleven states take adverse action based on bad checks. The Ohio DMV will even suspend your license if you have an “unruly child.”

So, it should come as no surprise that the federal government can do the same thing. IRS passport restrictions can include both denial of an application and revocation of a current passport. Read on to see if your travel privileges are at risk.

IRS Passport Restrictions and Seriously Delinquent Tax Debt

Ironically, the government’s authority for tax-related passport action does not come from the Internal Revenue Code. Instead, it comes from Section 32101 of the 491-page Fixing America’s Surface Transportation Act. Lawmakers passed the FAST Act in the waning days of the Obama administration. The Service did not start acting against passports until January 2018. So, the IRS passport restrictions are almost literally brand new. They apply if the person has a “seriously delinquent tax debt,” which is defined as:

  • Tax Debt: That may seem like a no-brainer, but it is an important point. Penalties, interest, and other non-tax charges do not count toward the $51,000 amount discussed below.
  • Assessed Obligation: Essentially, “assessment” means that the IRS has sent a notice or made some other collection attempt. Usually, the IRS has three years after the due date to assess an unpaid debt.
  • Dollar Amount: As of January 2018, the tax amount must exceed $51,000. That amount will probably increase in 2019 because it is tied to inflation. If you received a notice, do not look at the bottom-line amount due. That figure includes penalties, interest, and so on.
  • Prior Adverse Action: IRS passport restrictions cannot be the first penalty assessed. The Service must have first tried other things, such as a lien and/or an account levy.

Don’t miss the exceptions. They include a current and valid installment agreement and an accepted offer in compromise. The exceptions also include requests for a CDP (Collection Due Process) hearing or innocent spouse relief.

Possible Consequences

Periodically, the IRS certifies a list of seriously delinquent taxpayers and forwards the names to the State Department. At that point, the State Department must deny issuance or renewal applications and may revoke a current passport.

The State Department has not yet said what factors it will consider in a revocation proceeding. The National Taxpayer Advocate, a division of the IRS, has opined that the whole system may run afoul of the Taxpayer Bill of Rights. So, a Michigan tax defense lawyer has plenty to work with in these cases. We’ll explore these defenses in more detail in a future post.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.