It’s not a good time to be American expat and owe the Internal Revenue Service money as the tax man moves to snatch back hundreds of thousands of passports from those with significant debts.
The IRS and State Department have the power to cancel passport applications or revoke the important travel document if the holders have not paid their tax bills.
The IRS has announced that the passports of anyone owing more than $51,000 in tax and penalties is in ‘significant debt’ and risks forfeiture.
Around 360,000 US expats and travellers overseas who have not paid their tax are thought to be at risk of losing their passports, says the IRS.
The action is already underway.
Passport revocation rules
The IRS has received $11.5 million from 220 taxpayers who have fully paid their debts. About 1,400 more people have agreed to pay by instalments and thousands more are waiting to settle their bills.
The rules the IRS and State Department must follow to revoke a passport are strict as the tax debt must qualify as a legally enforceable federal tax debt.
To fall into this category, IRS must have issued a Notice of Federal Tax Lien or a Notice of Intent to Levy. Tax debtors can appeal the notice or negotiate a repayment plan.
The IRS must also give notice of at least 30 days to a taxpayer that their passport could be revoked.
Expats at risk
If no response is received or no arrangement to settle the debt is made, the State Department is then asked to cancel the passport.
Expats face the biggest risk because they may not realise until they try to renew visas or travel that their passports have been cancelled.
“Taxpayers who are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy,” said an IRS spokesman.
“If your passport is cancelled or revoked, after you’re certified, you must resolve the tax debt by paying the debt in full, making alternative payment arrangements or showing that the certification is erroneous.”
