Owe Uncle Sam? You May Have to Give Up Your Passport

Delinquent tax debt could mean your international travel plans are in jeopardy

close up of businesswoman's hand holding passport and ticket

(Image: Shutterstock)

A provision that was once highly controversial has now become law. President Obama signed the 5-year infrastructure spending bill recently and the bill adds a new section 7345 to the Internal Revenue Code in which your ability to travel internationally with a U.S. passport could be at stake.

The title of the new section is “Revocation or Denial of Passport in Case of Certain Tax Delinquencies,” and the idea reportedly goes back to 2012, when the Government Accountability Office introduced using the issuance of passports as an opportunity to collect on tax debts.

Details as to how this will be executed are reportedly scant, with various options being possible: from  no new passport, no renewal to State Department rescinding existing passports. The law only applies to those with delinquent tax debt over $50,000.

In most cases, the passport provision would apply if a taxpayer is subject to a lien or a levy, but it wouldn’t apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying by installment plan, or if a taxpayer is contesting a collection administratively or in court, David Kautter, a partner at the accounting firm RSM in Washington, told the Wall Street Journal.

There already exists debt-related consequences for passports in terms of child support, such as if you owe $2,500 or more, you are not eligible to receive one.

What are your thoughts on the IRS collecting tax debts before issuing passports? Fair or not? Leave your comments below.


6 Responses to Owe Uncle Sam? You May Have to Give Up Your Passport

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  4. Michael R. says:

    I think its a really good idea especially for those who think they are
    above the tax laws and either evade or don’t pay their back taxes. The new law seems to have left some leeway for people who are attempting to settle up. They are already doing it for people who are behind on child support so I am glad they are adding this component. I don’t agree with the minimum overage amount though. $50K is too high. I think it is a good starting point but needs to be much lower like $20K – $25K. The Government is targeting those who can afford to travel outside the country extensively
    for business or pleasure. These are the ones who typically don’t care
    about the money because they have plenty of it. They can afford to
    gather up all of their assets and leave the country without paying their
    back taxes. If they were smart they wouldn’t have all their assets kept
    in the US anyway. If they are not able to leave the US or enter another
    country without their passport then maybe they will make good on their
    tax debt. If they do business in other countries and travel often,
    revoking, not renewing or denying a new passport would hurt their
    business hopefully more than paying the taxes.

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