COVID-19 choked international travel in 2020, so this might have slipped under your radar with everything else happening in the world. But it’s true: you might be denied a passport if you owe substantial taxes!
If you have a substantial outstanding balance with the IRS, the government has several tools at their fingertips to ensure you pay. Passport denial is one of those tools.
How much is “substantial”?
$51,000. For now.
This law was passed back in 2015 but wasn’t enforced until 2018. As it stands today, both the IRS and State Department work together to ensure that the State Department denies passports to taxpayers who owe than $51,000 or more in back taxes, interest and penalties.
That number isn’t as generous as it seems. $51k sounds like a lot of money, but a big tax bill plus interest and penalties can add up quickly, especially for small business owners and landlords who were affected by stay-at-home orders and eviction moratoriums due to COVID-19.
Can I renew an old passport if I owe $51,000?
In 2021, probably not. It depends on how active the IRS has been with your paperwork. According to Microsoft.com, if the IRS issued a levy or filed a Notice of Federal Tax Lien, you will not be able to renew an old passport if you owe considerable taxes.
My passport is current, but I owe considerable taxes. Can I travel?
Probably not. It all depends on how far along the IRS is with their paperwork, but under IRC 7345, they do have the power to limit your passport or revoke it entirely.
I need to travel. How can I get my passport?
Just as the IRS has tools at their fingertips to make you pay taxes, you have rights and tools as well! The State Department will hold your passport application for 90 days so you can attempt to resolve the debt. During that time you can:
- Pay the balance in full
- Make a payment agreement with the IRS
- Request innocent spouse relief if it applies in your situation
- Enter into a settlement agreement with the Justice Department
- Get the IRS to accept an offer in compromise to satisfy the debt for less
Ultimately, you’ll need to be in contact with the IRS and/or the State Department in order to move forward with your travel plans.