In recent years, the federal government has been increasing its efforts to enforce tax compliance by threatening to revoke the passports of individuals with seriously delinquent tax debts. This change has not gone unnoticed by experts in the field, who have seen a surge in such enforcement actions. The threshold for a seriously delinquent tax debt is currently set at more than $62,000 as of 2024, and it includes not only the initial tax liability but also penalties and interest. This threshold is adjusted annually for inflation.
The Consequences of Passport Revocation
If a taxpayer’s debt meets the criteria for seriously delinquent tax debt and the IRS alerts the State Department, the individual may face a range of consequences. These consequences include the State Department’s refusal to issue a new passport and the possibility of revoking or limiting an existing one. For travelers, this can mean being unable to take trips overseas until their tax debt is resolved. Expats and business travelers may find themselves stuck in the U.S. until their tax case is settled. Passport revocation is considered a last-resort measure by the government to collect unpaid tax levies.
Enforcement Mechanisms and Implications
Revoking a passport is meant to get the attention of individuals who have ignored their tax obligations. The idea is to restrict the ability of taxpayers to travel abroad, forcing them to address their debts. According to experts like Troy Lewis, a certified public accountant, and accounting professor, passport revocation can be an effective tool for getting people to call the IRS and resolve their outstanding tax issues. The surge in passport revocation cases in recent years indicates that this enforcement mechanism is being used more frequently by the government.
While passport revocation for tax debts may seem drastic, various courts have upheld the government’s authority to take such actions. The IRS must follow a specific process before revoking a passport, including notifying the taxpayer of their seriously delinquent tax debt and providing an opportunity to resolve the issue. The State Department can limit the use of a passport only for return travel to the U.S., ensuring that individuals are not stranded abroad. However, taxpayers may still be caught off guard if they are unaware of their tax debts, such as when the IRS sends notices to outdated addresses.
To avoid having their passport revoked, individuals with seriously delinquent tax debts should take proactive steps to address their obligations. This may include paying the balance in full, entering into a payment plan with the IRS, or negotiating a compromise agreement. The IRS looks at various factors, such as past noncompliance and failure to cooperate, when deciding whether to revoke a passport. Taxpayers who receive a Letter 6152 from the IRS should act promptly to resolve their tax issues and prevent passport cancellation.
Ignoring your tax responsibilities can have serious consequences, including the revocation of your passport. The government is increasingly using this enforcement mechanism to compel individuals to pay their tax debts. To avoid being caught in a situation where your ability to travel is restricted, it is essential to stay informed about your tax obligations and take prompt action to address any outstanding debts. Passport revocation is a powerful tool that the government uses to enforce tax compliance, and individuals should take it seriously to avoid facing such consequences.