Importance of Resolving Tax Debt for Passport Retention

Are you aware that unresolved tax debt can lead to the revocation or denial of your passport? According to U.S. regulations, the State Department has the authority to revoke or refuse to issue passports to individuals who owe federal tax debts of $59,000 or more, given a tax lien or levy has been filed against them.

It’s essential to note that this regulation doesn’t apply to individuals adhering to an installment agreement for their taxes, those declared bankrupt, residents of a federally declared disaster area, or people whose tax debts are deemed uncollectible due to hardship by the IRS.

The process for this involves the IRS providing the State Department with the names of taxpayers meeting these criteria. Those with certified debts are notified that their names have been submitted to the State Department, typically through a CP508C notice. Receiving this notice should prompt immediate contact with the IRS to arrange debt resolution.

The significance of this issue is emphasized by the rising number of legal cases involving passport revocations due to tax debts. In the U.S. Tax Court, the IRS has consistently emerged victorious in these cases.

For instance, in one case (Gayou, TC Memo. 2023-61), a man owing approximately $62,000 in tax debts across three years contended that his debt certification to the State Department by the IRS was erroneous. However, the Tax Court deemed the IRS’s action appropriate and dismissed the case.

In another case (Meduty, 160 TC No. 13), a man with over $100,000 in tax debts spanning eight years claimed he never received the CP508C notice. The Tax Court ruled that an incorrect or missing notice doesn’t invalidate the debt certification to the State Department.

These examples highlight the serious implications of outstanding tax debts on one’s passport status, underlining the importance of addressing and resolving tax debts promptly.