In short:

• The IRS may revoke passports for “seriously delinquent tax debts” over $62,000 in 2024
• This is done in cooperation with the Ministry of Foreign Affairs as a last resort for data collection.
• Taxpayers should be notified but do not always receive this due to address issues.
• Courts have confirmed this practice as constitutional
• Americans abroad face additional notification and compliance challenges

In order to collect unpaid taxes from people with significant tax debts, the Internal Revenue Service (IRS) uses an effective tool: revoking or refusing passports.

Implemented in 2018, this measure allows the IRS to work with the State Department to restrict international travel for individuals with “serious tax debts.”

In 2024, the threshold for “serious tax delinquency” will be $62,000, including penalties and interest, and this amount will be adjusted annually for inflation.

Debts can include various types of federal tax liabilities, such as personal income taxes, corporate taxes for which the taxpayer is personally liable, and trust fund recovery penalties.

If a taxpayer’s debt reaches this amount and he or she has repeatedly ignored the IRS’s collection attempts, the agency will certify the debt to the State Department.

At this point, the State Department may deny a passport application, refuse to renew an existing passport, or even revoke a valid passport.

The IRS is required to notify taxpayers when their debts have been classified as serious delinquencies. This notice, known as Notice CP508C, is sent to the taxpayer’s last known address.

However, there have been cases where taxpayers did not receive this notice due to address errors or unreliable international mail delivery.

Typically, the Department of State allows a grace period of 90 days after receiving certification from the IRS before taking action on a passport.

This window of time provides taxpayers with an opportunity to resolve their tax problems, either by paying the debt in full, arranging a payment plan, or reaching a settlement agreement with the IRS.

This program poses a particular challenge for Americans living abroad. Expats are more likely to accumulate significant tax debt because they pay penalties for failing to file required foreign tax returns.

Due to frequent address changes or unreliable international postal services, it may be difficult for them to receive timely notifications from the IRS.

Several court cases have upheld the constitutionality of this passport revocation program. In Franklin v. United States and Maehr v. United States Department of State, federal appeals courts upheld the government’s authority to use passport restrictions as a means of collecting taxes.

A recent case (Robert A. McNeil v. United States) has clarified that the certificate of debt can be considered valid even if a taxpayer does not receive proper notice due to an error by the IRS.

This ruling underscores the importance of taxpayers being proactive in meeting their tax obligations and ensuring that the IRS has their current contact information.

The passport revocation program has proven to be an effective collection tool for the IRS. Tax experts report an increase in cases related to passport problems in recent years

The threat of losing their travel privileges has prompted many delinquent taxpayers to settle their outstanding tax debts.

For those facing potential passport restrictions, there are several options

• Taxpayers can pay their debt in full, arrange a payment plan with the IRS, make an offer in compromise, or prove that the certificate was issued in error.
• Once the issue is resolved, the IRS will send the taxpayer Notice CP508R and immediately instruct the Department of State to revoke the certification.

We should note that the State Department can restrict a revoked passport to only allow travel back to the United States. This provision prevents American citizens from being stranded abroad due to tax problems.

Tax experts advise people with significant tax debts to address the issue immediately to avoid possible travel disruptions.

They also recommend that Americans living abroad pay special attention to their U.S. tax obligations and maintain current contact information with the IRS.

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