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Ask Phil: Passports & Taxes

Today, Optima Tax Relief’s Lead Tax Attorney, Phil Hwang, discusses how owing back taxes can affect your travel plans, including renewing your passport or obtaining one for the first time. Here’s what you need to know about passports and taxes.

You might be wondering what your passport has to do with taxes. The IRS works with state departments to make sure that those with seriously delinquent tax accounts cannot leave the country. Actions that can be taken are a denial of application of a passport, denial of passport renewal, or even a revocation of your passport.  

So, what exactly is a seriously delinquent tax account? This amount can change year to year but in 2023, tax balances of $59,000 or more are considered seriously delinquent. This amount includes penalties and interest.  

If your passport gets revoked, or if your passport application or renewal is denied, you’ll need to resolve your tax debt before getting your travel privileges back. To do this, you’ll need to: 

  • Set up an installment agreement
  • Establish a hardship status, 
  • Getting an offer in compromise accepted by the IRS, or 
  • Pay your tax debt in full 

Now you know how passports and taxes are linked. Remember, always do something to help resolve the issue. If you’re not sure where to start, consult a tax professional for help. 

Tune in next Friday for another episode of “Ask Phil” where Phil will talk taxes and real estate. 

If Your Travel Privileges Were Revoked Because of Back Taxes, Contact Us Today for a Free Consultation 

Can I Have a Passport If I Owe Back Taxes?

can i have a passport if i owe back taxes

A passport is an essential travel document that allows individuals to explore new horizons, visit foreign lands, and experience diverse cultures. However, the privilege of holding a passport comes with certain responsibilities, one of which is fulfilling your financial obligations to the government. In this blog article, we will explore the question of whether you can obtain or renew a passport if you owe back taxes.  

Understanding Passports and Tax Obligations
Most people are quite shocked to learn that back taxes can affect your ability to obtain or renew a passport. The IRS’s control over this privilege is just another method they use to encourage taxpayers to remain compliant. If the IRS deems your tax debt “seriously delinquent,” they have the authority to notify the State Department, who can then revoke your passport, or deny your passport application or renewal. This action will not come as a surprise. If the IRS plans to contact the State Department about your back taxes, they will let you know with IRS Notice CP508C. The Department of State will also notify you in writing of their plans to revoke your passport or deny your passport application. 

What is considered “seriously delinquent?” 

According to the IRS, any tax debt that totals more than $55,000, including interest and penalties, is considered seriously delinquent. By this point, an individual likely has been levied and a notice of federal tax lien has been filed.  

How can I get this action reversed? 

Like many other consequences of not paying your taxes, the fastest and easiest way to reverse this action is to pay your tax debt. However, even paying your debt down so it falls below the “seriously delinquent” threshold can help resolve the issue. For those who cannot afford to pay, there are other options available to them including: 

  • Being approved for an installment agreement with the IRS 
  • Being approved for an offer in compromise 
  • Request innocent spouse relief 
  • Request a collection due process hearing 
  • Settle the debt with the U.S. Department of Justice 

On the other hand, there are some scenarios in which the seriously delinquent status can be removed. These include: 

  • Filing for bankruptcy 
  • Being a victim of tax identity theft 
  • Entering currently not collectible status 
  • Being impacted by a federally declared disaster area 
  • Requesting an installment agreement 
  • Submitting an offer in compromise 
  • Having an IRS-accepted adjustment that can pay off the full debt 

If you manage to fall into one of the above scenarios, it typically takes the IRS 30 days to reverse their action and notify the Department of State. In any case, it is crucial to take proactive steps to resolve the matter. Seek assistance from tax professionals, explore repayment options, and communicate with the relevant government agencies to find a suitable solution. Optima Tax Relief is the nation’s leading tax resolution firm with over a decade of experience helping taxpayers with tough tax situations.  

Contact Us Today for a Free Consultation