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Tax Debt will Affect Passport Renewals and Applications for Thousands of Americans

Americans who have overdue tax debts will soon find it difficult to receive a new or renewed passport, according to the Internal Revenue Service (IRS). It is estimated that approximately 362,000 Americans have overdue tax debts, and soon, Congress will be increasing efforts to enforce a law passed back in 2015.

The 2015 law requires that the IRS and State Department deny applications for new or renewed passports for taxpayers who have overdue tax debt in the amount of $51,000 or more.

Increased efforts to enforce this law began in February 2018, according to a recent Wall Street Journal report. Currently, the IRS is in the process of sending the names of these 362,000 individuals to the State Department.

According to the IRS Division Commissioner, Mary Beth Murphy, authorities are currently only denying passports rather than revoking them for people who hold excessive IRS debts. In fact, the State Department has stated that the agency has already denied passports for individuals who hold tax debts. For the time being, Americans with over $51,000 in tax debt will be able to continue traveling abroad if they hold current passports.

The IRS has accounted for inflation and other assessed penalties, taxes and interest when calculating the amounts owed.  These amounts do not include debts that were collected by the IRS, such as FBAR penalties due to the person’s failure to report foreign financial accounts or child support owed. If the taxpayer has entered into an agreement for installment payments, is in the middle of a bankruptcy proceeding, is a victim of identity theft or is in a federally declared disaster area is not subject to revocation of their passports.

The State Department is within its rights to issue a passport for emergencies or other humanitarian reasons should a U.S. citizen who is subject to this law need to return to the U.S. from overseas.  Individuals affected by the law will be notified in writing by the IRS.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.