Taxpayers with more than $50,000 of unpaid federal tax liabilities may find they cannot travel internationally, unless they are working with the IRS to resolve their tax liabilities. In December 2015, Internal Revenue Code § 7345 was enacted, authorizing the IRS to notify the State Department of taxpayers with “seriously delinquent tax debt,” which is:
- A legally enforceable federal tax liability of an individual;
- which has been assessed;
- is greater than $50,000; and
- for which a Notice of Federal Tax Lien has been filed or a levy is made.
The State Department may deny, revoke, or limit a taxpayer’s passport if the taxpayer has seriously delinquent tax debt. Although the statute was enacted in 2015, the IRS did not start sending notifications to the State Department until February 2018. If the IRS erroneously notifies the State Department that a taxpayer has a seriously delinquent tax debt, the taxpayer can file a lawsuit in the United States Tax Court or in a United States District Court.
If the IRS correctly notifies the State Department of a taxpayer’s seriously delinquent tax debt, it will issue Notice CP508 to the taxpayer, informing the taxpayer the State Department may restrict their passport, including denying applications for a passport or a passport renewal. If the State Department places any restrictions on a taxpayer’s passport, it will notify the taxpayer in writing.
Taxpayers who want to reverse restrictions on their passport can do so by paying their tax liabilities in full, agreeing to pay the IRS through an Installment Agreement or Offer in Compromise, or if a request for Innocent Spouse Relief is made. A taxpayer cannot pay the balance below $50,000 to reverse the passport restriction.
If you have international travel plans, and have received Notice CP508 from the IRS, or believe you have “seriously delinquent tax debt,” you are encouraged to resolve your unpaid liabilities as soon as possible. Otherwise, you risk having to cancel your travel plans and potentially forego the money spent on airlines tickets, hotels, etc. if you later find out your passport has been restricted.
If you have questions, contact Anderson & Jahde for competent, professional tax help.