The U.S. Department of State wants you to know that it is not playing around.
We reported last year that the State Department had a new rule, as of 2015, regarding tax debt but that it wasn’t implemented or enforced until early 2018. That rule spelled out that if an individual has “seriously delinquent tax debt” (at the time, $50,000 or more), the Internal Revenue Service (IRS) would contact the State Department, which would, in turn, “generally deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual.”
The State Department has never reported how many passports have been revoked or denied, but they’re apparently ready for Round 2.
In February, The Internal Revenue Service (IRS) notified 389,000 delinquent taxpayers they were at risk of losing their passports if they don’t pay up, according to the Taxpayer Advocate Service, an independent organization within the IRS that helps people resolve tax problems. The service reports that as of mid-May, IRS had removed about 100,000 taxpayers from its list of delinquents.
The IRS says it will next send a notice to taxpayers of its intent to revoke passports to “give them another opportunity to resolve their debts.” The notice will explain what steps the taxpayer needs to take to resolve the debt (i.e. set up a payment plan, make them aware of other payment options, or agree to an offer in compromise [that’s an agreement between a taxpayer and the IRS that settles the tax liability for less than the full amount owed]).
There are, as always, some snags and concerns. Taxpayer Advocate said the notice “does not provide taxpayers with an opportunity to come into compliance before the IRS makes the certification.” It’s also noted that “IRS data systems are not designed to accommodate the different styles of international addresses, which can cause notices to be undeliverable.” So individuals living abroad, for example, may not even know they owe the IRS any money.
“In the months to come, we may find out the true reason that the IRS is nudging taxpayers and the State Department to take more action on certified taxpayers,” says Jim Buttonow, managing principal of JL Buttonow, PLLC and a tax expert. “Most believe that just limiting applications and renewals is not enough enforcement presence to have a real impact on debt collection. We should expect more aggressive enforcement by both the IRS and the State Department in the future.”
Sounds pretty ominous. But for now, if you owe the IRS a substantial debt, don’t be surprised if they revoke your passport, or deny a renewal or application, until you pay up.
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This post first appeared on Your Mileage May Vary