Posted by Dennis Jao

Could Your Passport be Denied if You Owe Taxes?

Could Your Passport be Denied if You Owe Taxes?

If you didn’t know this before, now you do: owing to the IRS and having a significant outstanding balance can get your passport denied. The State Department and the IRS have started executing plans from a law passed in 2015, which entails that the State Department denies passports to the taxpayers who haven’t paid the IRS their debts worth up to $51,000. 


The Internal Revenue Code enacted the new rule with a number (IRC) 7345 to solve America’s Surface Transportation (FAST). The process entails the Department of statement to deny people new passports if they owe the IRS. It took many years before this law was signed, and today, it is hailed as one of the most effective ways of curbing excessive IRS debts.


Additionally, the IRS modified the amount for a qualified delinquent tax debt, which led to the set amount: $51,000. It is thought that before anyone gets to such a lump sum of money as debt to the IRS, he must have had several opportunities to do better and pay outstanding debt.


The IRS mails the notice to the person’s last shared address without any prior notice. If you know you have defaulted, you probably should look out for all information from the IRS, especially if you are keen on getting a passport. If an employee who works abroad doesn’t get his passport, he cannot attend some meetings, and his lack of being active will affect the company as well. 


The unpaid funds cut across back taxes, interests, and penalties taxpayers that owe this much will no longer be given new passports. Additionally, they cannot renew their old passports if the IRS files a notion of a Federal tax lien and the timeframe to challenge it expires. If the IRS also issues a levy, then the passports cannot be renewed or issued. 


However, before the passport is denied, the State Department will hold on to the application for 90 days, giving enough time to resolve the tax issues. To fix it, you have to do the following: 


  • Pay the complete balance to the IRS 

  • Start an installment system to pay back to the IRS within a specified period. 

  • Make the IRS accept your offer of compromise to pay the debt for less than the initial total amount. 

  • Get into a settlement agreement with the Justice Department to work on the debt. 

  • Ask for an innocent spouse relief option. 

  • Get a timely request for the due process while the IRS softens the debt process. 


The Consular Affairs is the face of the Department of States which caters to millions of people. This Consular is responsible for the protection of all American citizens overseas and their welfare. They are also responsible for issuing passports and other documentation for their citizens while protecting America’s borders and enabling legal travel to the country. 


Expatriates that are on assignment and their employees and employers must become conscious of the consequences of the new tax law. People are now advised to confirm their tax position with multinational employers examining all possible impacts on their employees and workforce. 


One of the reasons there is so much emphasis on tax education is that many people need to know when they become tax defaulters to avoid such actions. In some cases, it will be challenging to raise the debt owed within 90 days, so what can you do? Work closely with a tax professional who can show you your loopholes and be proactive with paying up such that you don’t have to lose your passport because you are owing to the IRS. 


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Dennis Jao
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