Abstract:
When taxpayers have seriously
delinquent tax debt (SDTD), they may face more than financial consequences. That
is, the IRS may revoke or limit their passports. How is SDTD defined? In 2022,
an unpaid tax bill becomes an SDTD when the assessed federal tax liability
exceeds $55,000, adjusted for inflation.
Large unpaid tax bills could endanger
your passport
If you have a large unpaid federal tax bill, beware. A 2015 law allows
the U.S. State Department to deny your passport application — or revoke or
limit your current passport — if the IRS certifies that you have a seriously
delinquent tax debt (SDTD).
How large does the debt have to be to qualify? In 2022, you have an SDTD
if the following are true: you owe more than $55,000 (adjusted for inflation)
in back taxes, penalties and interest; the IRS has
filed a Notice of Federal Tax Lien; and the period to challenge the lien
has expired or the IRS has issued a levy.
If this is your situation, you may be able to avoid losing your passport
by taking certain steps. Obviously, you can pay your tax debt in full
immediately. If that’s not possible, you may be able to pay your debt on a
timely basis with an approved installment agreement, an accepted Offer in Compromise or a settlement agreement with the U.S. Justice
Department.
Also, you might be able to retain your passport by requesting a
collection due process hearing regarding a levy, or by having collection
suspended through a request for innocent spouse relief. Typically, the IRS won’t
notify the State Department of an SDTD if there are extenuating circumstances,
such as bankruptcy, identity theft, federally declared disasters or other
hardships. Contact our firm for more information.
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