Having a federal tax debt can have many implications. Thanks to a new law, such a debt could now have big impacts on a person's ability to travel.
The law in question is the Fixing America's Surface Transportation Act. It was signed into law by the president earlier this month. One of the provisions of this law added having a federal tax debt to the list of things that can lead to a denial or revocation of a passport. This provision took effect immediately.
It is important to note that, under this provision, not all types of tax debt have passport implications. Rather, the new powers the law gives the Department of State to deny or revoke passports based on federal tax debt can only be used in relation to "seriously delinquent tax debt."
In relation to this provision, a tax debt is seriously delinquent if it: has been assessed, is legally enforceable, along applicable with interest and penalties amounts to over $50,000 (this threshold will be subject to cost of living and inflation adjustment) and has had a levy or lien notice filed in connection to it.
Under the new provision, when a person has a federal tax debt that qualifies as a seriously delinquent tax debt, the Department of State is required to deny any passport application or passport renewal application the person files. Also, the Department of State can revoke a pre-existing passport of such an individual. As a note, there are some exceptions to these new rules.
Not having access to a passport can seriously inhibit a person's travel abilities. Thus, these new rules could have big impacts on individuals with major tax debts, particularly those with jobs that involve a fair amount of international travel.
Individuals concerned that they could lose access to a passport as a result of a tax debt should speak to an experienced tax attorney. Such attorneys can help individuals who have a federal tax debt know what sorts of ramifications the tax debt could have and what steps can be taken in relation to the debt to try to avoid being subjected to impactful actions by the federal government.
Source: Forbes, "New Law Warns Delinquent Taxpayers: Pay Up Or You Could Lose Your Passport," Kelly Phillips Erb, Dec. 6, 2015