Individuals owing the IRS over $50,000.00 will soon find that the IRS is out to ruin their vacations unless Uncle Sam is paid. The IRS, teaming up with the State Department, is rolling out its latest tool to collect from delinquent taxpayers in the form of passport denial and revocation. As if levies and liens aren’t enough, the IRS is now targeting taxpayer vacations. Barring administrative delay, the IRS expects to send out the first notices to taxpayers as soon as the end of April, 2017.

The passport denial and revocation program is not a new idea for the IRS. The program was created by the Fixing America’s Surface Transportation Act (Pub. Law No. 114-94) enacted on December 4, 2015. In the time since the FAST Act was passed, the IRS and State Department have been learning to work cooperatively to share information and target delinquent taxpayers. It’s taken more than a year, but the IRS and State Department have finally released guidance as to how the agencies will implement the passport denial and revocation program.

Under the passport denial and revocation program, the IRS is authorized to notify the State Department when a taxpayer has “seriously delinquent tax debt.” The IRS defines “seriously delinquent tax debt” as federal tax debt totaling more than $50,000.00, inclusive of interest and penalties, for which either a Notice of Federal Tax Lien has been filed, or levy has been issued. Taxpayers currently making payments to the IRS under an Installment Agreement or an accepted Offer in Compromise need not worry about Uncle Sam canceling their vacations. The passport denial and revocation program is limited to taxpayers without a current resolution plan in place with the IRS.

If the IRS determines that a taxpayer qualifies for passport denial or revocation, the IRS will send a notice to the State Department to request that the State Department take action. If the State Department decides to act, the State Department can deny an application for a new passport or revoke an existing passport. Revoked passports will still remain valid for return travel to the United States. Taxpayers are always welcome to come home to pay their back taxes. For cases involving pending applications for a passport, taxpayers will be granted a brief grace period to resolve their back taxes before the State Department issues its final denial notice. In cases of revocation, however, no grace period will be provided.

If a taxpayer’s passport is revoked or an application for a passport is denied, the situation may not be capable of quick resolution. Once denied, passports will only be issued or reinstated after the taxpayer satisfies his or her delinquent taxes. For taxpayers seeking to satisfy tax debt through the IRS’ Offer in Compromise program, taxpayers may be denied a passport for a substantial period of time.

The passport denial and revocation program represents a new tool in the IRS arsenal to collect seriously delinquent tax debts.  Taxpayers owing the IRS more than $50,000.00 must act quickly to avoid this latest round of government collection efforts.  The tax attorneys at McLaughlinQuinn LLC specialize in representing taxpayers in IRS enforcement and collection matters and are ready to represent taxpayers’ against this new enforced compliance tool.  

For more information on this client update, please contact Thomas P. Quinn, Esq. or Kathryn S. Windsor, Esq.