Can You Get a Passport If You Owe Back Taxes to the IRS?
If you owe significant tax debt, you may be in for a surprise. The State Department will revoke your passport, or not issue you a new passport, if you owe a significant tax debt to the IRS. Therefore, taxpayers with tax debts and international travel plans should contact their CPA as soon as possible to resolve their tax debt and protect their passport.
Passport Revocation List: Passports and the IRS
The IRS will notify the State Department if a taxpayer has a seriously delinquent tax debt.
Taxpayers are notified that they are on the passport revocation list by receipt of IRS Notice CP508C. This is also called a Passport Denial Letter. Once notified, the State Department may then deny or revoke passport applications and renewals and restrict international travel.
This can result in a crisis for anyone planning to travel internationally. This is especially true for those who cross the border with Mexico or Canada every day for work.
What if You are Travelling Overseas?
According to the Department of State, if you are overseas and find yourself on the passport denial list, you may be eligible for a limited-validity passport which can be used for direct return to the United States.
What is Considered Seriously Delinquent Tax Debt?
As of January 2022, the amount of back taxes to be considered seriously delinquent is $55,000 or more. This amount is adjusted annually.
However, certain tax debts are NOT included in the determination of seriously delinquent tax debt. Seriously delinquent tax debts do not include:
- Child support
- Debts being timely paid through IRS-approved installment agreements or payment plans
- Debts being timely paid with an Offer in Compromise accepted by the IRS
- Report of Foreign Bank and Financial Account (FBAR) penalties
- Settlement agreements entered into with the Department of Justice (DOJ)
- Debts for which a Collection Due Process Hearing regarding a levy to collect the debt has been timely requested
- Taxes suspended because of a request for innocent spouse relief
In addition, the IRS will not certify anyone as owing a seriously delinquent tax debt who:
- Has an account that’s been determined to be “currently not collectible” due to hardship
- Has a request pending with the IRS for an installment agreement or Offer in Compromise
- Has been identified as a victim of tax-related identity theft
- Is in bankruptcy
- Is located within a federally declared disaster area
- Has an IRS accepted adjustment that will fully satisfy their tax debt
How Can You Find Out if You Are on the Passport Denial List
You will know that you are on the the passport revocation list for reason of back taxes due to the IRS by receipt of IRS Notice CP508C.
You may also check the status of your passport application on the US Department of State website.
Or, you may inquire about your passport status via phone by calling the National Passport Information Center at 877-487-2778 (or 888-874-7793 if you’re hard of hearing).
If You Owe Back Taxes, Don’t Wait!
If you have a scheduled international flight, you will probably be in a rush. Your plane is not going to wait for you.
When a passport is denied or revoked, the taxpayer should petition the IRS for the action to be reversed. The normal processing time for these petitions is 30 days. However, expedited processing is available for those who will be traveling, under certain circumstances.
Fortunately, the matter can be corrected if the taxpayer is cooperative with the IRS and is able to show a good-faith attempt to resolve their tax debt. If the taxpayer can afford to pay the tax, then the passport will be issued or restored as soon as the debt is cleared.
Can I Get a Passport if I Cannot Afford to Pay the Tax?
If a taxpayer in need of a passport cannot afford to pay their tax, which is often the case on tax bills of $55,000 or more, then one of several tax resolution options should be considered. These options include an Offer in Compromise, an installment agreement or non-collectible status.
The IRS will require that the taxpayer be compliant with the tax laws in order to be eligible for a resolution option. Importantly, all tax returns for the prior six years must be filed with the government before the IRS will even consider any kind of payment arrangement or negotiation of the tax.
In addition, the IRS will also require that withholding taxes are paid throughout the year. If a taxpayer is an independent contractor or owns a business, then the IRS will require that taxes are being paid 0n a quarterly basis. Quarterly taxes are due by April 15, June 15, September 15 and January 15 of the following year.
In addition to tax compliance, the IRS has many other requirements that the taxpayer must pass before a resolution option will be finalized and a passport approved. While this is intimidating, it can be done and your right to a passport can be restored. Speak with a CPA with experience in IRS negotiation to navigate the process for you.
Other Reasons Your Passport Application May be Denied
In addition to back taxes due to the IRS, there are a number of other legal reasons that a U.S. passport application may be denied. Here is a list of situations that may result in the rejection of your passport application:
- Owing child support (this is very common)
- Missing payments on a loan from the Department of State
- Failing to pay taxes or debts
- Felony convictions
- Court orders
Yes, You Can Get a Passport if You Owe Taxes to the IRS
In summary, yes, you can get a passport if you owe taxes to the IRS and find yourself on the passport revocation list. However, this only works if you follow the rules and promptly work with the IRS to resolve your tax matter!
Feel free to call us in Atlanta at 678-235-5460 or in Chicago at 773-828-0551. We will be happy to discuss your situation, including the resolution of your taxes, filing missing tax returns and restoring your right to a passport. We deal with the IRS so you do not have to.
Massey and Company CPA is a boutique tax and accounting firm serving individuals and small businesses in Atlanta, Chicago and throughout the country. Our services include tax return preparation, tax planning for businesses and individuals, IRS tax problem resolution, IRS audit defense, sales tax, and small business accounting and bookkeeping.
We want to be your CPA firm!