This article was published by the CNBC on August 14, 2019 and features commentary from Reaz Jafri.
The IRS is finally ready to make good on threats to strip U.S. passports from Americans who owe more than $52,000 in overdue taxes.
The tax collector and the State Department are escalating enforcement of the Fixing America’s Surface Transportation (FAST) Act. This law enables them to deny passport applications or revoke existing passports due to outstanding debts.
Now, the IRS will actively begin referring unresolved cases to the State Department for potential revocation, IRS spokeswoman Cecilia Barreda told CNBC.
The State Department denies passport applications or revokes existing passports based on the information it receives from the IRS. The $52,000 must qualify as legally enforceable federal tax debt, including interest and penalties, according to the IRS.
The agency issued a press release earlier this week reminding delinquent taxpayers of the law’s provisions.
“Our goal was to remind people that this program has been in operation but additionally that it is our intention to begin referring cases to the U.S. Department of State for passport revocation,” Barreda said.
The government agency has notified more than 400,000 taxpayers that their passports are at risk since the program began, according to Barreda.
As a result of these notices, the IRS has received $11.5 million as of the end of June 2018 from 220 individuals. About 1,400 more people had entered into payment agreements as of that date, according to a July 13, 2018, report by CNBC. More recent figures were not available from the IRS.
Taxpayers at risk of having their passport revoked will also receive a letter informing them of the impending referral to the State Department.
“They will receive [the letter] before the IRS refers a case for revocation,” said Barreda. “If there’s a message here, it’s that taxpayers who have a tax debt are encouraged to contact the IRS promptly to resolve their tax debt and avoid the possible revocation of their passport.”
Attorney Reaz Jafri, partner and global head of immigration at law firm Withers Worldwide in New York, said that’s critical, especially given the 30-day window within which debtors must respond.
“Our biggest concern as an international firm is that a client who is overseas will get hit with one of these letters, never see it and have their passport canceled,” he said. “It can easily happen that a client returning to the U.S. finds out at the border that their passport is canceled and the only way to get it back is to settle the debt.
“But that can take months, if not years,” Jafri added. “Meanwhile, your family is overseas.” Jafri said he expects the law to be challenged in court at some point.
