The President signed into law a new provision to the Internal Revenue Code that gives the U.S. government the right to revoke or deny the renewal of U.S. passports of U.S. persons who owe more than $50,000 in U.S. federal taxes. It was appended to a massive highway funding bill, H.R. 22, Fixing America’s Surface Transportation Act, the “FAST Act.”
The new provision, Code section 7345, authorizes the Secretary of the Treasury to certify to the Secretary of State that a taxpayer has a “seriously delinquent tax debt". A "seriously delinquent tax debt" is greater than $50,000 (including penalties and interest) for which the IRS has either filed a lien or levy. Upon receiving the certificate, the Secretary of State can deny, revoke, or limit the taxpayer's U.S. passport.
The debt must be settled, uncontested, delinquent, and not subject to ongoing administrative appeal or review. Taxpayers who have entered into installment agreements, submitted offers-in-compromise, have requested collection due process hearings, or requested innocent spouse relief are exempt from the application of this provision. Moreover, those who need to travel for emergency or humanitarian purposes are also exempt.
For more information, contact Castro & Co.