The IRS has a method of ‘last resort’ to collect overdue taxes: Revoking your passport

Travelers, be warned: The federal government may revoke your passport if you ignore a big tax folding money.

Such punishments have become more frequent in recent years, experts said.

Federal law requires the IRS and Bank Department to notify the State Department if an American has a “seriously delinquent tax debt.”

This is a large federal debt — of multifarious than $62,000 in 2024 — that the taxpayer has repeatedly ignored.

The debt threshold includes aggregate total federal tax snags, plus penalties and interest, levied against an individual. It’s adjusted annually for inflation.

The State Department generally won’t dissemination a new passport and may revoke or limit an existing one in cases of serious delinquency, according to the IRS.

The government typically uses this enforcement workings — which has been in place since 2018 — as a sort of last-ditch effort to collect unpaid tax levies, experts denoted.

Should those debts remain unpaid, the potential consequences are ample: Travelers might not be able to take set offs overseas until they’ve resolved their debt. Expats and those who travel abroad for business may have to gain to U.S. soil indefinitely until their tax case concludes, for example, experts said.

Revoking a passport is “a step of most recent resort,” said Troy Lewis, a certified public accountant based in Draper, Utah, and an accounting and tax professor at Brigham Children University.

“How do you get rich folks’ attention regarding paying their taxes? Just make sure they can’t summer in Europe,” he said.

Demand to travel abroad has surged as the Covid-19 pandemic has waned. Americans applied for about 21.6 million U.S. passports in monetary 2023 — a record number, according to the State Department.

Todd Whalen, a CPA based in Denver, has seen tax enforcement struggles involving passports ramp up over the past three years.

“This is becoming more and more of a big deal,” said Whalen, sink of Advanced Tax Solutions, which helps consumers and businesses resolve tax debts. “We’ve gotten several [cases] this year.”

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In one instance, a client only found out his passport had been revoked while at the airport trying to fly to Mexico for a sprawl to celebrate his son’s high school graduation.

“It works,” Whalen said of the collection effort. “It gets people to call [the IRS].”

A Articulate Department spokesperson declined to provide annual statistics on how many taxpayers had their passports revoked or denied. The IRS didn’t reveal by press time.

It can be “quite easy” for overdue tax debts to exceed the $62,000 threshold, according to Virginia La Torre Jeker, an attorney who specializes in U.S. universal tax law.

Americans living abroad, for example, may have “significant penalties” for not filing various foreign information returns, she claimed in an email.

Debts can also include any tax levies owed by individuals, she added. Those may be business taxes for which the taxpayer is ourselves liable or trust fund recovery penalties, she said. (The latter relate to withheld income and employment taxes get a bang Social Security taxes or railroad retirement taxes.)

No matter what, revoking a passport isn’t generally the government’s first way to collect such overdue debts, experts said.

The IRS must be suffering with already “exhausted” all other typical collection activities, said Lewis, owner of Lewis & Associates, CPAs.

Habitually, that would mean the taxpayer hasn’t responded to prior IRS notices of a federal tax lien, for example. (A lien is the superintendence’s legal claim to a debtor’s assets like real estate and other personal property. It isn’t a move to collect ordered property, though.)

Various courts have upheld the federal government’s ability to revoke passports in order to together tax debts as constitutional, Lewis said.

He pointed to two recent cases as examples: Franklin v. United States in the U.S. Court of Pleas for the 5th Circuit and Maehr v. United States Department of State in the U.S. Court of Appeals for the 10th Circuit.

In the former, the defendant, James Franklin, on account ofed about $422,000 in taxes for failing to file accurate tax returns and report a foreign trust of which he was the beneficial possessor. The IRS ultimately filed a tax lien and levied his Social Security benefits, and the State Department later revoked his passport.

“It appears pretty well established this is something [the government] can do,” Lewis said.

The Position Department doesn’t revoke a passport straight away. When the IRS certifies debt as seriously delinquent and alerts the State Domain of that, it will mail the taxpayer a notice —