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Failure to Pay Your Taxes Could Result in Losing Your Passport

Passage of a new law empowers the State Department to revoke, deny or limit passports for taxpayers who have a seriously tax delinquency.

On December 4, 2015, President Obama signed into law legislation that allows the State Department to deny or revoke passports for U.S. citizens who have not paid their taxes.

Under the new law, which goes into effect on January 1, 2016, the State Department can revoke, deny or limit passports for anyone whom the IRS certifies as having a delinquent tax debt. In general, the passport provisions apply if a taxpayer is subject to a tax lien.

It is unclear how many citizens ultimately will be affected by the new law. However, Americans living abroad may be the hardest hit, because they need their passports for purposes other than leisure travel, including work visas or residency permits.

What is particularly troubling is that Americans living abroad may not even be aware that they face collection activity from the IRS. A recent report issued by the Treasury Inspector General found that the IRS’s mailing systems are not designed to accommodate international addresses. The report goes on to state that the process used by the IRS for addressing international mail is ineffective.

Our expectation is that the IRS will exclude from passport denial/revocation most taxpayers who are in the process of resolving their tax debt. As the consequences of not having a passport could be problematic, we recommend that taxpayers who could be impacted by the new law contact their attorney to determine how best to correct the situation before the new legislation goes into effect.