Got federal tax debt of $50,000 or more? The IRS now has the power to take away your passport, thanks to a transportation bill passed in December.
The IRS law, titled "Revocation or Denial of Passport in Case of Certain Tax Delinquencies," grants the IRS the ability to revoke passport privileges from taxpayers whose tax debt equals $50,000 or more by sending a message to the State Department. The law takes effect this month.
The IRS already works with the Justice Department to regulate US taxpayers who have foreign accounts through the Foreign Account Tax Compliance Act (FATCA), which was passed in 2010. The FATCA bill has routinely been criticized for unfairly extending the powers of the IRS abroad, placing ties with foreign banks where they are not needed.
The State Department already has the right to either refuse to issue or renew passports to people who owe more than $2,500 in child support or certain other debts, like travel expenses related to helping a passport applicant return to the US.
This new law, which comes out of previous iterations that stalled in Congress, is the first to take direct action in attempting to curb the travel of taxpayers who have outstanding tax debt.
“The [Senate Finance] Committee is aware that the amount of unpaid Federal tax debts continues to present a challenge to the IRS,” a report on the bill reads. “The Committee believes that tax compliance will increase if issuance of a passport is linked to payment of one's tax debts.”
In March of 2011, research done by the Government Accountability Office (GAO) explored the possibility of using passport issuance as a means of collecting taxes. GAO found that of the 16 million passports that were issued in 2008, about 224,000 of those individuals owed a little over 5.8 billion in unpaid federal taxes.
