In recent years, instances of the federal government revoking passports due to unpaid tax debts have increased. The law mandates that the IRS and Treasury Department inform the State Department when an American holds a “seriously delinquent tax debt.” This debt is a substantial federal amount, exceeding $62,000 as of 2024, that the taxpayer has persistently neglected. This threshold encompasses the total federal tax liabilities, along with penalties and interest charged against an individual, and is adjusted annually for inflation. The State Department typically refrains from issuing new passports and may restrict or revoke existing passports in cases of severe delinquency. The government utilizes this enforcement tactic, in place since 2018, as a final endeavor to recover unpaid tax debts.
Travelers facing seriously delinquent tax debts may encounter various repercussions. For instance, individuals may be unable to travel abroad until they settle their debts. Expatriates and business travelers may be required to return to the U.S. until their tax matters are resolved. Revoking a passport, according to Troy Lewis, a certified public accountant and tax professor, is considered a last-resort measure to compel wealthy individuals to pay taxes. By restricting travel to countries like Europe, the government aims to prompt taxpayers to address their outstanding balances.
Todd Whalen, a CPA, has witnessed a rise in tax enforcement actions concerning passports over the past few years. Tax experts have acknowledged that the issue has gained prominence. Notably, travelers may find out about their revoked passports only when attempting to fly. While this approach has proven effective in prompting people to contact the IRS, the specific number of revoked or denied passports annually remains undisclosed by the State Department and the IRS.
Virginia La Torre Jeker, an attorney specializing in U.S. international tax law, noted that it is relatively easy for overdue tax debts to surpass the $62,000 threshold. Americans residing overseas may face substantial penalties for failing to file foreign information returns. Various tax obligations, including business taxes and trust fund recovery penalties, may contribute to an individual’s overall debt. However, passport revocation is typically not the initial method employed by the government to collect outstanding debts. Before resorting to passport revocation, the IRS must exhaust standard collection activities, such as issuing notices of a federal tax lien, which signifies the government’s legal right to a debtor’s assets.
Multiple court cases have validated the federal government’s authority to revoke passports for tax debts. Recent cases, like Franklin v. United States and Maehr v. United States Department of State, have upheld the constitutionality of this enforcement action. The State Department follows a structured process before revoking a passport, issuing a notice to the taxpayer upon the IRS certifying a seriously delinquent debt. Individuals facing such circumstances must either pay their debts in full, enter into a payment plan, or negotiate a compromise agreement with the IRS to resolve the issue.
Despite these measures, debtors may still be caught off guard by passport revocation when traveling, particularly if the IRS fails to update a taxpayer’s address. In some cases, individuals only realize they owe taxes when attempting to travel. The IRS aims to prevent misunderstandings and inadvertent consequences by notifying debtors in advance of potential passport revocation.
Ignoring tax bills can have serious implications, including passport revocation. To avoid such scenarios, it is essential for taxpayers to remain aware of their obligations and address any outstanding debts promptly. Failure to do so can result in travel restrictions and other inconveniences, making it imperative for individuals to stay informed and proactive in managing their tax liabilities.