Tucked away in the “Surface Transportation Reauthorization & Reform Act of 2015” (Surface Transportation bill) is a little known provision that could have a big impact on your ability to get a passport.
A new law, Section 32101 of the Surface Transportation bill, allows the IRS to work with the State Department to revoke, limit or deny your passport application if you have more than $50,000 in unpaid federal taxes including interest and penalties. The law became effective on December 4, 2015.
Section 32101 is similar to an already existing program that denies an U.S. passport to anyone who owes $2,500 or more in child support. Under this program the names of those who owe back child support are submitted electronically to the Office of Child Support Enforcement which then notifies the Department of State when a passport should be denied. All passport services offices are updated regularly with the information. Once the back child support is paid, it can take up to 4 weeks before you can apply for a passport.
Revocation or denial of a passport for seriously delinquent taxes is allowed only after the IRS has followed its examination and collection procedures and you have exhausted your administrative and judicial rights or time to exercise those rights has expired. The law would not apply to tax debt that is being timely paid under an installment plan or for debt collection that has been suspended. There is also an exception for emergency and humanitarian travel.
Procedures for implementing the law have yet to be developed and issues such as dual citizenship will have to be addressed. Also to be worked out is the requirement that passport holders have a Social Security Number (SSN). This may be a challenge for those living abroad without a SSN and no known means to obtain one.
The idea to restrict passports because of unpaid taxes has been around for a few years. In 2012, the General Accounting office issued a report on the “Potential for Using Passport Issuance to Increased Collection of Unpaid Taxes.” The GAO found that linking passports to unpaid taxes “could have the potential to help generate substantial collection of unpaid taxes and increase tax compliance.”
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