New Tax Law Can Affect Passports
By Brian Katusian
As part of the 5-year infrastructure spending bill that was recently signed into law by President Obama, the Internal Revenue Code was amended to add new Internal Revenue Code Section 7345 entitled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” Under the new law, the IRS can require the U.S. State Department to revoke, deny or limit passports for anyone with a “seriously delinquent tax debt” until the debt is resolved. A “seriously delinquent tax debt” includes unpaid, legally enforceable Federal tax liabilities greater than $50,000.
The administrative details are currently limited, so the full ramifications for taxpayers are yet to be determined. However, the potential is that U.S. citizens with outstanding Federal tax liabilities in excess of $50,000 traveling outside of the U.S. could find themselves stranded outside of the U.S. without a passport.
Taxpayers with outstanding Federal tax liabilities in excess of $50,000 should contact a tax professional to discuss recommended steps that should be taken in order to resolve their outstanding Federal tax liabilities and prevent potential revocation, denial, or limitation of their passports.