Robert J. Fedor, Esq., L.L.C.

Planning to travel abroad? Better not have any tax debt!

Tax laws are always changing. And one of the new tax laws you may not have heard about has the potential to ground prospective travelers who plan to venture abroad.

In a bill signed into law late last year, the State Department has been given the power to revoke, deny or limit passports for anyone the Internal Revenue Service (IRS) certifies as having a delinquent tax debt of $50,000 or more. The law, entitled "Revocation or Denial of Passport in Case of Certain Tax Delinquencies," grants the IRS the ability to revoke the passport of any such taxpayer by sending certification of the debt to the State Department. The law went into effect January 1, 2016.

What does this mean for travelers who allegedly owe delinquent federal taxes? The law is short on practical details and enforcement provisions. It could be read to mean no new passports or passport renewals for delinquent taxpayers. It could also be read to mean rescission of existing passports.

Although previous versions of similar laws had stalled in Congress, this new one looks to have some political traction. It is also has the distinction of being the first law to take direct action to curb travel by taxpayers who have outstanding tax debt. (A law that was already on the books addresses travel and delinquent child support, giving the government the power to refuse to issue or renew passports to persons who owe over $2,500 in support payments.)

A Senate Finance Committee report appended to the bill indicates the "amount of unpaid Federal tax debts continues to present a challenge to the IRS.” The Committee reasoned that "tax compliance will increase if issuance of a passport is linked to payment of one's tax debts.”

So how many people could this affect? Hard to say with any certainty, but a March 2011 report by the Government Accountability Office (GAO) found that of the 16 million passports that were issued in 2008, about 224,000 of those were issued to individuals who owed over $5.8 billion in unpaid federal taxes.

Further complicating matters is the interplay between passports and the REAL ID Act. If you are in a state which has a compliant ID (like Ohio), there may not be any additional ramifications to worry about. However, for those in non-compliant states (like Illinois), the issues are thornier and collateral consequences could become severe.

If you are concerned about the government withholding or revoking your passport due to tax delinquency issues, be sure to contact a qualified tax attorney for advice. Don't let tax issues prevent you from traveling.

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