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US Expats with Large Tax Debt at Risk of Losing Their Passport

Are you an American citizen living overseas who owes more than $53,000 in federal taxes to the IRS? If so, you may be at risk of losing your U.S. passport. As part of the Fixing America’s Surface Transportation (FAST) Act, the State Department is now able to deny passport application renewals or even revoke one’s U.S. passport due to outstanding debts. Further, Internal Revenue Code 7345 authorizes the IRS to certify that tax debt to the State Department for action. 

Specifically, the IRS has the authority to ask the State Department to deny or revoke your passport if you have what is considered, “seriously delinquent tax debt”. As of May 17, 2019, the IRS had sent more than 400,000 notification notices to taxpayers warning them of their substantial tax debt. To be clear, the IRS cannot revoke your passport, but it can ask the State Department to deny passport applications or renewals until the taxpayer agrees to pay back the taxes owed. In extreme cases, the IRS may request the State Department to revoke a taxpayer’s passport.

If you’re living overseas, a passport is needed for applying for a work visa, opening a bank account, obtaining a mortgage on a foreign property, and, of course, traveling between countries. 

It is important to note that if you are currently paying tax owed through an installment agreement or an offer in compromise, are in bankruptcy, live in a military combat zone, or are currently negotiating with the IRS, this enforcement action will not apply to you.

However, if you have received a notice 6152 from the IRS to pay your tax debt, and you live overseas, you’ll have 90 days to get in touch with the IRS and set up a payment plan. If you fail to respond, or fail to reach a payment agreement, the case will be referred to the State Department and you may not be able to renew your passport, or, worse-case scenario, may even have your passport revoked. Given this is an issue with such enormous implications, your best course of action would be to engage a firm that is experienced in expat tax matters, and in particular, one that is able to negotiate with the IRS on your behalf, even when you are overseas. Polo Tax is well-versed in IRS representation, given we are able to represent taxpayers in all 50 states, as well as expat tax matters, given that expat tax preparation and advisory is our core competency. If you have received Letter 6152 from the IRS, we urge you to get in touch with us right away so that we may negotiate on your behalf and resolve this critical issue for you.