As a taxpayer, it is essential to remain compliant with the Internal Revenue Service (IRS) to avoid potential penalties or legal consequences. While many individuals might be aware of some tax-related consequences, not everyone knows that a significant tax debt or issue can lead to the revocation of their passport. This article will delve into the circumstances under which the IRS can revoke a passport and offer guidance for resolving tax issues.
The IRS and Passport Revocation
The IRS has the authority to revoke a passport under a provision of the Fixing America’s Surface Transportation (FAST) Act, which was enacted in December 2015. This law mandates the IRS to work in coordination with the State Department to deny, revoke, or limit the passport of any individual with a ‘seriously delinquent tax debt.’
What Constitutes a Seriously Delinquent Tax Debt?
A seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt, including penalties and interest, totaling more than $59,000 (as of 2023, adjusted for inflation). The following conditions must also apply:
- A notice of federal tax lien has been filed, and all administrative remedies have been exhausted or lapsed.
- A levy has been issued by the IRS.
Exceptions and Exclusions
There are specific situations in which a taxpayer with a seriously delinquent tax debt might not face passport revocation:
- The taxpayer is in the process of disputing the tax liability in question through an IRS administrative appeal or in court.
- The taxpayer has requested innocent spouse relief under the IRS provisions.
- The tax debt is under consideration for an installment agreement, offer in compromise, or suspension of collection due to a collection due process hearing.
Moreover, passport revocation may not apply to taxpayers in a federally declared disaster area, victims of tax-related identity theft, those currently in bankruptcy, or those living in a combat zone.
How Does the Process Work?
If an individual meets the criteria for passport revocation, the IRS will send a certification of the seriously delinquent tax debt to the State Department. Before the certification, the IRS will mail a Notice CP508C to the taxpayer’s last known address, informing them of their tax debt and the possible passport consequences. The State Department may then revoke the passport or limit it to return travel to the United States.
Reversing the Revocation
To reverse the passport revocation, the taxpayer must resolve their tax debt through one of the following methods:
- Pay the tax debt in full.
- Enter into an installment agreement with the IRS.
- Settle the tax debt through an offer in compromise or another IRS-approved method.
- Request innocent spouse relief.
- Have the tax debt suspended due to a collection due process hearing or another valid reason.
Once the tax debt is resolved, the IRS will send a reversal certification to the State Department, typically within 30 days. The State Department will then reinstate the individual’s passport privileges.
To avoid the risk of passport revocation, it is crucial to stay proactive with your tax obligations. Here are some tips to help you stay compliant:
- File your taxes on time and accurately to avoid penalties and interest.
- If you cannot pay your tax debt in full, consider setting up an installment agreement or apply for an offer in compromise.
- Consult a tax professional or tax attorney if you have any concerns or require assistance in resolving tax issues.
Our Raleigh Tax Controversy Attorneys Can Help
While the IRS can revoke a passport due to a seriously delinquent tax debt, there are steps that taxpayers can take to prevent this from happening or to resolve their tax issues. By staying proactive and addressing any tax concerns with the assistance of a knowledgeable tax attorney, taxpayers can minimize the risk of passport revocation and navigate the complexities of tax compliance.
In cases where the revocation has already occurred, it is essential to act quickly and work closely with the IRS to settle the tax debt and reinstate passport privileges. By staying informed and taking appropriate measures, taxpayers can avoid the serious consequences of passport revocation and maintain their ability to travel internationally without restrictions.
Don’t let tax issues jeopardize your freedom to travel; contact the experienced tax attorneys at Wilson Ratledge today for expert guidance and personalized solutions to resolve your tax concerns. Let us help you protect your passport and your financial future.