Americans born in the U.S. and naturalized Americans alike should take note that citizens who have significant overdue tax debt can be denied passports under a law passed by Congress in 2015. Under this law, the IRS and State Department are required to deny passports to Americans who owe more than $51,000 in overdue tax debt. As many as 362,000 Americans fall into this category, according to an IRS spokesperson. In February, the IRS began sending tens of thousands of relevant names to the State Department; the agency that reviews passport applications.
According to the State Department, violators who have not paid their debts prior to applying for a passport will have their application delayed or denied. The State Department has already denied passports under this enforcement. However, officials have stated that only applications for new or renewed passports are being denied. Although the State Department has the ability to, the passports of Americans with outstanding debt are not being revoked, as of yet.
This enforcement could cause significant problems for Americans living abroad. According to a report issued by the Treasury Inspector General for Tax Administration (TIGTA), IRS systems often do not accommodate international addresses, which results in some notices to be undeliverable. Ultimately, delivery of international mail, especially in the context of IRS notices, is less certain than domestic mail. Some Americans abroad may be unaware of their debt to the IRS, making them at risk for a passport denial. The State Department has said that Americans with overdue taxes who are already abroad are eligible for a limited passport which allows them only to directly return to the United States.
As of June 2018, around 220 people have paid $11.5 million in overdue debt. At least one person paid $1 million in overdue taxes to avoid a passport denial. The IRS intends on offering payment plans or exceptions to financially distressed taxpayers, people who are bankrupt, victims of tax-related identity fraud, people claiming innocent spouse relief or people who live in a federally declared disaster zone.
If you have questions on immigrating to the United States, be sure to contact Berardi Immigration Law to schedule a consultation with one of our attorneys today!