Did you know that having a seriously delinquent tax debt could lead to issues with your passport? Find out what happens!
If you have a significant unpaid tax bill, the federal government might revoke your passport. Under federal law, the IRS and Treasury Department must notify the State Department when an American owes a seriously delinquent tax debt, which is defined as a federal debt of more than $62,000 (in 2024), including accumulated tax liabilities, penalties, and interest.
The State Department generally will not issue a new passport and might even revoke or restrict an existing one if the tax debt is considered seriously delinquent, according to the IRS. This measure has been used since 2018, often as a last resort to collect unpaid taxes.
If your debts remain unpaid, the consequences could be severe: you might not be able to travel overseas until your debt is settled. This could particularly impact expats and those who travel abroad for business, who may have to return to the U.S. until their tax situation is resolved.
According to Troy Lewis, a CPA and tax professor, revoking a passport is “a step of last resort.” He explains that this strategy effectively grabs the attention of those who have ignored their tax obligations: “How do you get rich folks’ attention regarding paying their taxes? Just make sure they can’t summer in Europe”.
According to Todd Whalen, a CPA based in Denver, there has been a noticeable increase in passport-related tax enforcement over the past three years. Whalen, who helps clients resolve tax debts, has seen multiple cases where passports were revoked due to unpaid taxes. He recalls a case where a client found out his passport was revoked while attempting to fly to Mexico for his son’s graduation celebration. Whalen notes that the government’s approach is effective: “It gets people to call [the IRS]“.
Other Collection Efforts Before Revoking Passports
The IRS typically tries other collection methods before moving to revoke a passport, explained Lewis, owner of Lewis & Associates, CPAs. This usually means that the taxpayer has not responded to previous IRS notices, such as a federal tax lien. A lien is a legal claim on a debtor’s property, but does not involve seizing that property.
Federal courts have upheld the constitutionality of revoking passports to collect tax debts. Two notable cases include Franklin v. United States and Maehr v. United States Department of State. In Franklin, the defendant owed $422,000 in taxes and failed to report a foreign trust. The IRS placed a lien and levied his Social Security benefits before the State Department revoked his passport.
Options Available to Affected Travelers
If the IRS identifies a taxpayer’s debt as seriously delinquent, they will notify the State Department, which will then send the taxpayer a CP508C notice outlining potential consequences. If the taxpayer applies for a passport after receiving this notice without addressing their debt, the State Department will generally deny or close the application.
However, individuals can still use their current passport unless officially notified of its revocation or limitation by the State Department. The State Department can limit a passport’s use to returning to the U.S., preventing a person from being “trapped in limbo” abroad.
To avoid passport revocation, the IRS sends a Letter 6152, urging the taxpayer to contact the IRS within 30 days to resolve their account. Nonetheless, many are caught by surprise, particularly if the IRS has incorrect contact details, leading to missed notices and unexpected issues when trying to travel.
“A lot of times, they don’t know they have a balance due until they show up at the airport”, Whalen said.