U.S. passports can now be denied or revoked due to non-payment of a U.S. tax liability.
The tax liability must be considered “seriously delinquent tax debt”[1]. IRC §7345 states that if the Secretary of State receives certification from the Commissioner of the IRS that an individual has “seriously delinquent tax debt” of greater than $50,000 USD, then the Secretary of State can deny or revoke or limit the individual’s U.S. passport.[2]
There actually has to be a notice of lien or a notice of levy in place for the revocation or denial to occur.[3] If a taxpayer is in the process of disputing a tax liability, then this section will probably not apply. Or, if the IRS and the taxpayer have negotiated an installment agreement or an offer-in-compromise and the taxpayer is making timely payments, then this section will probably not apply.
This is the first time that the IRS has linked U.S. tax liability to issuing of passports. The concern is always that now that the precedence is in place, the IRS could become more aggressive by reducing the applicable U.S. tax liability or link non-filing of U.S. tax returns to passport issuance.
Many U.S. citizens who live in foreign countries are not aware of their U.S. tax filing obligations. The U.S. requires all U.S. citizens to file a tax return, if they meet U.S. filing requirements, no matter what country they actually live in. The IRS’ Offshore Voluntary Disclosure Program (OVDP) can help individuals “catch up” on their U.S. tax filings. A future blog will discuss these programs. In the meantime, if you have any U.S. tax questions, feel free to contact CPA WorldTax at taxinfo@cpaworldtaxllc.com
[1] IRC §7345
[2] IRC §7345 [http://uscode.house.gov/view.xhtml?req=(title:26%20section:7345%20edition:prelim), accessed October 17, 2016].