IRS May Now Revoke Passports in Connection with Unpaid Tax Liabilities

IRS May Now Revoke Passports in Connection with Unpaid Tax Liabilities
Riker Danzig Tax, Trusts & Estates UPDATE February 2016

Legislation has been enacted which permits the IRS to revoke or deny the passports of individuals with delinquent tax liabilities exceeding $50,000. On December 4, 2015, the President signed the Fixing America’s Surface Transportation Act (“FAST Act”), a $305 billion infrastructure spending bill. Aside from the various transportation and infrastructure projects, the FAST Act also contains several new tax provisions, including the addition of IRS Section 7345 entitled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies” which permits the IRS to work with the State Department in order to revoke, deny or restrict the passports of individuals having a “seriously delinquent tax debt.”  

Under this new tax section, a “seriously delinquent tax debt” means any unpaid, legally enforceable federal tax liability of an individual: (1) which has been assessed by the IRS; (2) which exceeds $50,000, including interest and penalties; and (3) with respect to which a notice of lien has been filed and all administrative rights with respect to such filing have been exhausted, or a levy has been made.  Exceptions are provided for debts that are being timely paid pursuant to an installment agreement or an offer-in-compromise with the IRS, and for debts for which collection is suspended because a due process hearing is requested or because an innocent spouse election has been made. Notice to the individual is required, and challenges on limited grounds to such revocation may be brought by bringing a civil action against the United States in a District Court of the United States or the Tax Court.