Back Taxes Could Cost You Your Passport

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Way back in 2012, the Government Accountability Office reported that the IRS was toying with the idea of using passports to ensure people paid their delinquent back taxes. Now that idea, which many felt was silly, has become a reality. The five year infrastructure bill Obama recently signed includes a section titled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.

Despite the controversial nature of the new law, it managed to get passed, along with a bill to increase funding for highways. If you only owe a few hundred in back taxes, you don’t have anything to worry about. The way the new law has been written only allows the State Department to deny a passport application or passport renewal application if the outstanding back tax bill exceeds $50,000.

This will be a huge problem for anyone who does a great deal of international travel, especially if the travel is a direct result of their professional life. And there’s another problem. Starting in 2016, some people may be required to have their passports on them if they’re going to be traveling domestically.

States that could require passports even for domestic states, include:

  • Minnesota
  • New Hampshire
  • Louisiana

New York was another state that considered requiring passports, but has signed a waiver so that for the moment, a driver’s license will be enough for you to board a domestic flight.

The reason some states may require a passport for domestic flights stems from the Real ID Act.

It’s likely that most people think they have nothing to worry about. After all, even if they owe back taxes and don’t realize it, there’s no way the amount they owe could come close to $50,000. The problem is that the $50,000 figure includes fees, penalties, and interest all of which add up quickly, so you could end up owing a great deal more than you realize.

The truth of the matter is that a back tax bill of more than $50,000 is more common than some people might realize. The amount of back taxes owed, combined with the fact that the IRS has filed a notice of lien is all it takes for the IRS to make arrangements to have your passport revoked. If you’ve received a Notice and Demand for Payment, you’re expected to resolve the matter and pay the amount, in full, in 10 days or less.

A passport really isn’t something you shouldn’t be without, so if you’ve discovered that you owe the IRS $50,000 or more, the best thing you can do is to contact a tax attorney and explain your situation. The tax attorney will do everything in their power to help you resolve the matter in a timely fashion. With a good tax attorney on your side and handling the communication between you and the IRS, there’s every reason to believe that the tax attorney will help you keep your passport, work out a payment plan, and possibly even get the fees and interest attached to your back taxes removed, drastically reducing the amount you owe.

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