Owing a significant amount in unpaid taxes can be stressful and overwhelming. You may feel uncertain as to how you found yourself in this situation and how to find a way out.
For Americans with seriously delinquent tax debt, these debts can now affect your ability to travel abroad. Based on information received from the IRS, the State Department can deny new or renewal passport applications. If you owe a significant amount in debt and are either planning a trip out of the country or are simply curious as to whether this could affect you, what should you know?
What is “seriously delinquent tax debt?”
Seriously delinquent tax debt refers to debt owed to the IRS that exceeds $52,000. However, there are certain situations in which you could owe in excess of this amount and still forego consequences to your passport. Such exceptions include:
- You have already worked out an approved payment agreement with the IRS.
- You have accepted an offer in compromise from the IRS.
- You have requested innocent spouse relief.
- You have declared bankruptcy.
- You are the victim of identity theft.
Other exceptions could apply as well. If you are unsure of whether your situation excludes you from passport restrictions, discuss your case with your tax professional.
What if you already have a passport?
Notably, this restriction applies to those who apply for a new or renewed passport. If you already have a passport and have a trip planned, you likely will not face barriers unless you receive a letter from the State Department telling you otherwise.
For Americans living abroad, the passport restrictions may not affect your ability to travel back home to California or elsewhere. However, when it comes time to renew your passport, you may face significant complications.
What should you do?
If you receive a notice from the State Department after applying for a passport, don’t panic. Because the department retains your application for 90 days, you have time to address the issue. To resolve your debt, you must prove that your debt is fully paid, no longer qualifies as “seriously delinquent” or that the label is incorrect due to a qualifying circumstance, such as those listed above.
Because the IRS can take up to 30 days to change this status, act quickly. Work with a tax attorney to determine your options to move forward and regain your freedom to travel abroad.