When you owe back taxes, the penalties you face don’t only deal with things like tax evasion charges or lots of bills — it can also affect your quality of life.
One of the biggest ways the IRS can affect your quality of life is by snatching your passport.
If you owe more than $64,000 in back taxes (seriously delinquent tax debt), the federal government has the right to keep you in the United States. The IRS has issued rules for those who travel outside of the country to pay up or lose the ability to get a passport.
In 2019, the IRS began sending a form to the State Department called the Certification of Individuals With Seriously Delinquent Tax Debt. As a part of the FAST Act, the IRS is issuing these forms as a way to get citizens who owe a lot of money to the Federal Government to pay off their tax debt.
If you’re wondering “can the IRS take my passport?”, read below as we explore the answer to that question and other details that cover actions you can take to protect yourself.
Can the IRS Take My Passport?
There have been several tax changes throughout the years, but one of the most life-changing involves the IRS’ ability to take your passport. The idea that the IRS can deny or revoke your passport for delinquent tax debt sounds like a plot twist in a bureaucratic thriller, but it’s all too real. This authority originates from laws designed to clamp down on tax evasion through the restriction of overseas journeys.
So, yes, the IRS can absolutely revoke your passport. The nation’s most aggressive collection agency has a new enforcement tool: Passport denial and revocation. Passed into law back in 2015, the IRS has only recently worked out the process with the State Department for identifying and certifying taxpayers with more than $64,000 in back taxes, interest, and penalties.
What do you need to do to avoid an emergency where you could lose your passport? We will answer some frequently asked questions.
So, the answer is yes, the IRS can take your passport if you fall behind on taxes. However, it’s not that cut and dry.
There are criteria that they use to decide whether they’ll revoke your passport. Consider these points below to see how it happens:
What Constitutes Seriously Delinquent Tax Debt?
Seriously delinquent tax debts are not just any amount owed to Uncle Sam; they have specific criteria. These include penalties and interest that push the total above $62,000—a figure adjusted annually for inflation. So if you’re picturing an ominous clock ticking as interest piles up, you’re not far off.
This situation doesn’t spring up overnight. It follows after the IRS has taken several steps to collect, including filing a Notice of Federal Tax Lien. That means there’s been plenty of forewarning before reaching this stage.
Thresholds and Adjustments for Inflation
If keeping track of inflation rates isn’t your hobby, don’t worry—the IRS does it for us when calculating what qualifies as seriously delinquent tax debt. The threshold started at $50,000 back in 2015 but has since risen to over $62,000 due to annual adjustments based on inflation.
This adjustment ensures that taxpayers aren’t unfairly penalized due to economic factors beyond their control while still holding individuals accountable for significant unpaid taxes.
For more details about how these notices work and ways to address them before facing passport revocation consequences visit Understanding Your CP508C Notice. This page sheds light on receiving such notice from the State Department and gives crucial advice on navigating through resolving issues within 90 days.
Navigating through this maze might seem daunting without help but knowing where you stand is half the battle won against losing your passport privileges because of unresolved tax issues.
What Is the FAST Act?
Also known as the Fixing America’s Surface Transportation Act, it’s a funding and authorization bill that governs federal surface transportation spending in the United States. Passed overwhelmingly by a bipartisan vote to help with infrastructure the government enforced the law in 2015 and the CP508C is just a part of the bill that is being used to get the appropriate funds for any repairs and to fund new projects.
The law can unintentionally affect travelers and those who are living overseas, especially if they miscalculated something when they were filing your taxes. Not only can it keep you from leaving the country by denying passports or revoking current visas, but it will also affect those who are living overseas if you owe more than $64,000.
Can Your US Passport Be Revoked If You Are Overseas?
If you are an expat living overseas, it’s already complicated when it comes to filing income taxes. Not only do you have to pay into the country in which you’re staying, but the United States citizens pay income taxes to the IRS. The only exceptions are what you paid in taxes to the country you live in exceeds your FEITE or if you qualify for the Foreign Earned Income Tax Exclusion, which is an exemption for expats who are making under $100,000 per year in their country of residence.
But if your tax preparer hits a wrong number, then the FAST Act can affect you in many different ways.
How Can I Check If My Passport Is Revoked?
If you owe more than $50,000 in unpaid taxes, there is a good possibility that the government will take your passport away from you. But, the IRS is not obligated to notify you or a power of attorney if your passport has been revoked. That can leave travelers and expats in a sticky situation if their passport gets revoked while they’re already abroad.
Since the implementations in 2018, there have been more than 362,000 American citizens had their passports taken from them, due to unpaid income taxes. So how do you find out if the government took your passport due to tax debt? There are a few options that may help you if the IRS revokes your passport.
- You can promptly contact the IRS directly about any concerns with your passport.
- Contact US Passport Services about the situation as soon as possible.
The good news is if you have only received a letter in the mail about your delinquent taxes, then you still have time to find an experienced tax attorney to help you work something out with the IRS. The State Department and IRS give you 90 days to resolve your tax delinquency, before issuing a denial. Also, if someone steals your identity, you may have more leeway with the IRS when it comes to paying your back taxes.
You also have the choice to contact the IRS directly and work out something to help pay your tax debt. We are going to talk about that a little more in the next section.
Actions After Receiving a Certification Notice
If you’ve been hit with a CP508C notice, signaling your tax debt has entered the ‘seriously delinquent’ zone, it’s crucial not to freeze like a deer in headlights. Receiving this notice transforms it from a mere aggravation in your bill stack to something that could very well endanger your ability to travel internationally.
Responding to CP508C Notices
The first thing you should do after receiving this daunting notice is take a deep breath. Panic leads nowhere but down rabbit holes. Next up, understand that this isn’t the endgame – there are steps you can take to mend fences with the IRS and keep your passport right where it belongs: in your travel bag.
First off, make sure the information on the CP508C notice matches what you know about your federal tax payment status. Mistakes happen more often than we’d like to think, so if something seems off, get on it immediately by contacting the IRS directly for clarification or correction.
If everything checks out and you indeed owe Uncle Sam those dollars, consider setting up a payment plan pronto or paying off whatever portion of that debt possible straight away. Quick action might prevent further complications regarding international travel plans or even applying for new passports.
Facing seriously delinquent tax debts head-on may seem daunting at first glance but remember – solutions exist as long as willingness and effort follow suit closely behind them. The key here is proactivity; sitting back will only exacerbate issues while stepping forward could pave way towards resolution faster than anticipated.
How Will I Know When The IRS Has Reported Me To The State Department?
You should receive notice from an assessment of past-due taxes that includes penalties and interest. Then the Service also needs to have started the lien/levy process before certifying you to the State Department.
The National Taxpayer Advocate has complained the process does not provide enough time for a taxpayer to solve any tax problems and avoid certification. She advocates a 30-day notice to provide a taxpayer time to solve the tax problem.
1. If Your Taxes are Seriously Delinquent
When your taxes are delinquent, the IRS could revoke your passport.
While the IRS hasn’t outlined a specific number of years, you don’t have anything to worry about if you’re only a little behind. However, rather than let it get to this point, make sure that you stay on top of your tax bill so that the IRS never exercises this option.
2. You Owe a Large Amount in Past-Due Taxes
Don’t think that falling behind on taxes is something that only you’re dealing with.
There are plenty of people that find themselves in plenty of tax debt. Because this is such a common issue, don’t think that the IRS is going to come after you immediately after missing the tax deadline.
While you should always file within the deadline, the IRS generally won’t take measures like revoking your passport unless you owe $51,000 or more in back taxes.
Keep an eye on your tax bill so that you know exactly how much money you owe and whether the passport will come into play.
3. There Were No Arrangements or Provisions Made
Most of the time, the IRS won’t come after your passport if you make payment arrangements.
When you can’t pay what you owe immediately, the IRS urges you to set up an installment agreement. This is a payment plan that lets you chop your bill into monthly payments instead of paying it all in one lump sum.
Check out installment agreements after you file to see what sort of options you have.
I Can’t Pay My Full Balance, What Are My Options?
The good news is that there are a few, but it is crucial to take action to avoid a difficult situation that could impact your upcoming travel schedule. These actions will delay certification and protect your passport. Your passport can be one of the priciest assets you have seized because it limits your life experience.
If you have five figures of tax debt and your passport is at risk of seizure, the points below will help you rectify the situation.
1. Set Up an Installment Plan
Like you just learned, the IRS will typically show leniency as long as you’ve made arrangements.
Figure out everything you need to do to set up an installment arrangement plan to take care of your taxes.
You can apply for an installment agreement plan on the IRS’ website. In many situations, you’ll receive approval on the spot and will get further correspondence in the mail so that you can pay your taxes monthly.
When you pay, it’ll be in the form of debit or electronic funds transfer (EFT) sent to a third-party vendor. This vendor will send the money to the IRS and you’ll get monthly statements related to how much you owe.
As you apply, you’ll let the IRS know how much you can pay on a monthly schedule. They’ll confirm your amount or let you know another amount that they feel comfortable with you paying each month.
The plan is official once you sign it, and shows what date each month you want to make your payment. You can make payments manually or in the form of an automatic payment tied to your bank.
By setting up an installment plan, you’re showing the IRS that you’re serious and aware of your tax debt.
2. Get a Personal Loan to Pay Off Taxes
If you want to pay your taxes off now instead of signing up for payments, a personal loan can help.
By consolidating your taxes and paying them off with a personal loan, you’ll still have debt, but you won’t owe the IRS. This way, you can pay your loan back at your leisure without having to worry about losing your passport.
Touch base with different personal loan providers at national banks, community banks, and credit unions in your area. Look into interest rates and what sort of terms you can sign on for.
Search for the best terms and make sure to pay off your taxes right away, as opposed to dipping into part of it and still owing tax money.
3. Pay as Much as You Can
You’ll generally keep the IRS off your back when you tackle as much of the tax debt as you can afford.
By reducing your tax debt with a payment, you can avoid having your passport revoked. In addition to the lump-sum payment, write a notarized letter to the IRS letting them know that you are aware of your debt and that you will address it.
4. Write a Letter to the IRS Stating Your Circumstances
Don’t hesitate to touch base with the IRS and level with them.
Get the letter notarized, date it, and acknowledge the amount owed on your taxes. The IRS will likely assign an agent to your case, get in touch with you, and let you know what options you have.
5. Work to Get Your Penalties Removed
A tax abatement is also an option when you are trying to handle your debt.
When you get an abatement, you will be able to remove fees due to late payments. By reaching out to some professionals that can assist you with your tax case, removing penalty payments can make it easier to address your past-due bill.
6. Hire the Assistance of a Tax Attorney
Having access to a tax lawyer could be what you need to rectify these issues.
Be sure to hire a licensed tax lawyer that understands your situation. Whether you are dealing with trying to get your passport back or finding a deal for your tax bill, an attorney can walk you through your options and help you protect yourself.
Why Should You Fight to Keep Your Passport?
When trying to rectify your tax case, you need to understand why it’s important to fight to keep your passport. Consider the following:
1. It’s a Sign of How Bad Your Tax Situation Has Gotten
Fighting to keep your passport is about more than your travel needs. Like having your wages garnished or license suspended, having your passport taken is one of those indicators that you need to address your debt.
Let handling your passport motivate you to handle your tax debt.
2. It Limits Your Travel Potential
Keeping your passport valid will allow you to travel for either business or pleasure.
You may have to travel internationally for work or live part of the year abroad. Getting off the “seriously delinquent tax debt” list is much harder than staying off it, to begin with. Send us an email with your concerns, so one of our attorneys can explain more.
Our skilled attorneys represent taxpayers across the country and have the experience to find an answer right for you.
Whether you’re planning a family vacation or want the opportunity to go on exotic weekend getaways, you’ll want to have your passport. Keep your travel opportunities open by handling your passport situation.
3. You Limit Your Job Potential
A suspended passport could decrease career opportunities.
It can even jeopardize your career if you have a security clearance or a job that requires travel. Back taxes can also show up on your credit report. Since many companies now check your credit report during the hiring process, this could stop you from getting a job.
4. Travel Laws are Changing
As of new laws passed in 2018, you’ll need a passport to get on a plane both domestically and internationally.
Because of this rule, you’ll need to address any passport problems before the law takes full effect. States are offering Real IDs instead of state licenses to address these federal travel laws as well.
5. Motivation to Fix Your Finances
When your passport is at risk, it should light a fire under you to address your tax issues.
The prospect of losing your passport will help you address any financial problems. Use this as an opportunity to get finances in order and take care of this year’s tax problems.
Fix Your Passport Problems and Get Your Taxes Under Control
You might be wondering, “Can the IRS take my passport?”.
The answer to that question is an absolute yes. However, you have recourse, as long as you consider the information above.
Let these tips assist you so that you can keep your passport and address your taxes at the same time. This will help you manage your tax bill and finances.
Take time to reach out to us for the tax help you need.
