The simple answer is… now they can.
In early December 2015, President Obama signed into law a powerful new tool for the IRS to pursue delinquent taxpayers. Passed as part of the Fixing America’s Surface Transportation Act, or “FAST Act,” a new section 7345 was added to the Internal Revenue Code, which will allow the IRS, under certain circumstances, to tell the State Department to revoke, deny, or limit passports for taxpayers who have past due liabilities to the IRS.
If you are wondering what the Internal Revenue Code has to do with fixing America’s surface transportation, then you are not alone.
Basically, if a taxpayer has a “seriously delinquent” tax debt (defined as a legally enforceable tax liability greater than $50,000), then the IRS now has the power to instruct the State Department to deny, revoke or limit passports of taxpayers. Please note that this applies to U.S. citizens.
There are four situations in which the IRS cannot revoke or deny your passport. Specifically, a debt is not considered “seriously delinquent” if it is (1) under an installment agreement with the IRS; (2) if its “collection is suspended”; (3) currently subject to a CDP Hearing procedure; or (4) for which Innocent Spouse Relief under IRC § 6015 has been elected.
The new law also provides a judicial review of the IRS’s attempt to revoke, limit, or deny your passport. Such an appeal can be taken in either the Federal district court or the U.S. Tax Court, which generally hears only deficiency proceedings.
If you have questions about the IRS’s ability to revoke, suspend, or deny a passport, or about general IRS collection matters, please feel free to contact Cramer & Anderson, LLP to discuss your issues.
Attorney Neal D. White, who works in the firm’s Litchfield office, may be reached at 860-567-8718 or by email at firstname.lastname@example.org.