TLDR:
- The IRS can revoke passports for “seriously delinquent tax debt” over $62,000 in 2024
- This is done in partnership with the State Department as a last resort collection method
- Taxpayers are supposed to be notified, but may not always receive notice due to address issues
- Courts have upheld this practice as constitutional
- Americans abroad face additional challenges with notifications and compliance
The Internal Revenue Service (IRS) has been employing a powerful tool to collect unpaid taxes from individuals with significant tax debts: revoking or denying passports.
This measure, implemented in 2018, allows the IRS to work with the State Department to limit international travel for those with “seriously delinquent tax debt.”
In 2024, the threshold for “seriously delinquent tax debt” stands at $62,000, including penalties and interest. This amount is adjusted annually for inflation.
The debt can include various types of federal tax liabilities, such as individual income taxes, business taxes for which the taxpayer is personally liable, and trust fund recovery penalties.
When a taxpayer’s debt reaches this threshold and they have repeatedly ignored IRS attempts to collect, the agency certifies the debt to the State Department.
At this point, the State Department can deny a passport application, refuse to renew an existing passport, or even revoke an active passport.
The IRS is required to notify taxpayers when their debt has been certified as seriously delinquent. This notification, known as Notice CP508C, is sent to the taxpayer’s last known address.
However, there have been instances where taxpayers did not receive this notice due to address errors or unreliable international mail delivery.
The State Department typically provides a 90-day grace period after receiving certification from the IRS before taking action on a passport.
This window allows taxpayers an opportunity to resolve their tax issues, either by paying the debt in full, entering into a payment plan, or making a compromise agreement with the IRS.
For Americans living abroad, this program poses unique challenges. Expatriates may be more likely to accumulate significant tax debts due to penalties for failing to file required foreign information returns.
They may face difficulties receiving timely notifications from the IRS due to frequent address changes or unreliable international mail services.
Several court cases have upheld the constitutionality of this passport revocation program. In Franklin v. United States and Maehr v. United States Department of State, federal appeals courts affirmed the government’s authority to use passport restrictions as a means of tax collection.
A recent case (Robert A. McNeil v. United States) highlighted that even if a taxpayer does not receive proper notification due to an IRS error, the certification of the debt can still be considered valid.
This ruling underscores the importance of taxpayers proactively managing their tax obligations and ensuring the IRS has their current contact information.
The passport revocation program has proven to be an effective collection tool for the IRS. Tax professionals report an increase in cases related to passport issues over the past few years
The threat of losing travel privileges has prompted many delinquent taxpayers to address their outstanding tax debts.
For those facing potential passport restrictions, there are several options available
- Taxpayers can pay their debt in full, set up a payment plan with the IRS, make an offer in compromise, or prove that the certification was made in error.
- Once the issue is resolved, the IRS will send Notice CP508R to the taxpayer and promptly inform the State Department to reverse the certification.
We should note that the State Department can limit a revoked passport to allow only return travel to the United States. This provision prevents American citizens from being stranded abroad due to tax issues.
Tax experts advise individuals with significant tax debts to address the issue promptly to avoid potential travel disruptions.
They also recommend that Americans living abroad pay particular attention to their U.S. tax obligations and maintain current contact information with the IRS.
