Failure to Pay Your Taxes Could Result in Losing Your Passport
Passage of a new law empowers the State Department to
revoke, deny or limit passports for taxpayers who have a seriously tax delinquency.
On December 4, 2015,
President Obama signed into law legislation that allows the State Department to deny or
revoke passports for U.S. citizens who have not paid their taxes.
Under the new law,
which goes into effect on January 1, 2016, the
State Department can revoke, deny or limit passports for anyone whom the IRS
certifies as having a delinquent tax debt.
In general, the passport
provisions apply if a taxpayer is subject to a tax lien.
It is unclear how many citizens ultimately will be affected
by the new law. However, Americans living abroad may be the hardest
hit, because they need their passports for purposes other than leisure travel,
including work visas or residency permits.
What is particularly troubling is that Americans living
abroad may not even be aware that they face collection activity from the IRS. A
recent report issued by the Treasury Inspector General found that the IRSs
mailing systems are not designed to accommodate international addresses. The
report goes on to state that the process used by the IRS for addressing
international mail is ineffective.
Our expectation is that the IRS will exclude from passport
denial/revocation most taxpayers who are in the process of resolving their tax
debt. As the consequences of not having a passport could be problematic, we
recommend that taxpayers who could be impacted by the new
their attorney to determine how best to correct the situation before the new
legislation goes into effect.