The Internal Revenue Service (IRS) has added a new provision that will allow the agency to revoke a passport for tax delinquencies. The new policy was buried in the Fixing America’s Surface Transportation (FAST) Act signed by President Obama and passed by Congress. This new Act adds section 7345 to the Internal Revenue Code entitled, “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” The addition of section 7345 goes back to 2012 when the Government Accountability Office came up with the idea of the issuance of U.S. passports to collect taxes owed to the federal government and fight tax evasion. The new code says the State Department can revoke, deny or limit passports for anyone the IRS certifies as having a seriously delinquent tax debt exceeding $50,000.
According to IRS data, there are at least 12 million taxpayers with delinquent accounts. However, the data does not specify how many of these taxpayers have delinquencies above $50,000.The limited administrative details of the new provision could mean no new passport, no renewal, and could even mean the State Department will rescind existing passports. Evidently, the State Department will only act when the IRS informs them of the delinquency. The impact of FAST and REAL ID will more likely be felt by business travelers and those whose delinquencies have not been resolved thru the initial IRS collection process.
If you are saying to yourself, “I never travel overseas, how does this affect me?” Remember REAL ID? REAL ID is the anti-terrorism measure that sets minimum standards for states that issue licenses and state identification. REAL ID is currently being implemented by the Department of Homeland Security and has set January 22, 2018 as the deadline for which all states must comply with the REAL ID requirements. If your state refuses to comply with the REAL ID requirements or has requested an extension to comply, you would need to use your passport in order to travel domestically. This may mean that your tax delinquencies can prevent you from flying not only internationally, but domestically since REAL ID would limit the type of acceptable identification for air travel.
However, there are a few exemptions to the new rule, which include working out an installment agreement to pay the past due taxes or the IRS accepting an offer and compromise. We ultimately hope that the new rule would be a last resort for the IRS to collect past due taxes and we may not see the ripples of the affects it will have on travel plans for some time. The IRS has not announced a timeline for implementation, but stated that they will begin implementation as soon as “feasibly” possible.
Overstaying the period of authorized stay may result in being barred from re-entering the U.S. for up to 10 years.
- The Three Year Bar: Person who overstay a visa for more than 180 days but less than one year, and who leave the U.S. prior to the institution of removal proceedings, are barred from reentering the U.S. for three years from their date of departure.
- The Ten Year Bar: Persons who overstay in the U.S. for more than one year after their authorized period of stay has expired, and who leave the U.S. prior to the institution of removal proceedings, are barred from reentering the U.S. for ten years from their date of departure.