The Internal Revenue Service (IRS) has a number of tools it can use to demand tax payment from taxpayers. Those who fail to make their payments can face additional fees and have the government take the money directly from their paycheck through levies. Another tool available to the IRS: they can limit your ability to travel.
How can the IRS limit a taxpayer’s ability to travel? The agency will notify the State Department when a taxpayer has “seriously delinquent tax debts.” This is allowed under a provision within the Fixing America’s Surface Transportation (FAST) Act, the State Department would use this information to deny a renewal or initial application for a passport.
What is a “seriously delinquent tax debt” for purposes of this action? The agency defines a serious debt as one that is at or above $52,000. This includes the tax bill as well as penalties and other fees.
What happens to taxpayers that meet this definition? The taxpayer would receive a Notice CP508C from the IRS. Generally, the taxpayer then has 90 days to address the issue. Resolutions can include:
- Payment. Taxpayers can pay the tax obligation in full or set up a payment plan with the IRS.
- Offer in compromise. The taxpayer can propose an agreement with the IRS that results in the agency accepting a smaller payment for the tax bill.
- Settlement agreement. This option involves an agreement with the Department of Justice.
If the agency revokes or denies the taxpayer’s passport, the IRS will remove the certification from the taxpayer’s record within 30 days after the issue is resolved.
What happens if the taxpayer has a valid passport? In some cases, the State Department could revoke the passport. The agency also has the ability to limit the taxpayer’s ability to travel outside the United States — approving some forms of travel but denying others.