360,000+ Americans With Tax Debt May Be Denied Passports
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360,000+ Americans With Tax Debt May Be Denied Passports


The Internal Revenue Service is going ahead with enforcing a law that will allow authorities to revoke and deny passports of those owing over $51,000 in unpaid taxes. The Fixing America's Surface Transportation (FAST) Act, which became a law in December 2015 says that the IRS and State Department must deny or revoke passports of any taxpayer who owes a debt of more than $51,000 in taxes, including interest and penalties. The law allows denying first-time passport applications, as well as its renewal. In extreme cases, a valid passport can even berevoked by the State Department.Currently, 362,000 people fall under the ambit of this law.

The IRS has begun sending names of the defaulters in batches to the State Department and confirmed that passport denials have already occurred. It also confirmed the news that to avoid being denied a passport a debtor paid off $1 million.

As of now, the IRS says that they are only denying new passports and passport renewals and not revoking passports that have already been issued. It means that anyone who has a passport can travel abroad until their passport expires. After that, they will need to pay off their debts or arrange to pay them off in installments before they can be issued a new passport.

However, certain groups of people are exempt from this new law. If you’ve filed for bankruptcy, been a victim of tax-related identity theft, are located within a federally declared disaster area, or have debts determined to be “not collectible due to hardship,” your passport is not at risk. Exemption is also granted to members of the armed forces deployed into combat. Also, owing to humanitarian or emergency reasons, the IRS and the State Department may not enforce the law upon American citizens who are already abroad and shall wait for the debtor to return home.

While the crackdown has been deemed a success by the IRS, with IRS Division Commissioner Mary Beth Murphy informing that as many as 220 people have already paid off their debts in full, and another 1,400 people have signed installment agreements to ensure that they can apply for a passport, critics of the law argue that the overzealous and instant implementation of the law is leaving taxpayers who are, in principle, willing to clear their debts, with too little time to do it. "There is no grace period for resolving your debt before the State Department revokes an existing passport," the IRS said in February, as it embarked on enforcing the law.

Author: Pradeep Banerjee