Back Taxes Could Cost You Your Passport

If you owe too much in back taxes, your passport application could be denied.

If you’re behind on your taxes, you could face trouble traveling internationally.

That’s because the government plans to reject passport applications from taxpayers who owe more than $51,000 in overdue taxes.

According to CNBC:

The State Department denies passport applications based on the information on outstanding debts it receives from the IRS.

As many as 362,000 Americans could be affected by these rules by the end of this calendar year, according to the IRS.

The agency received $11.5 million as of the end of June from 220 individuals who have paid their debts in full, according to the IRS. About 1,400 more people have entered into payment agreements.

CBS MoneyWatch reports that the passport action is the result of the Fixing America’s Transportation Act signed by President Barack Obama in 2015. That law included the requirement that the State Department go so far as revoking passports for those who are severely delinquent on their taxes.

According to CBS:

Enforcement of the law has its critics, who say that because the IRS notifies tax debtors at about the same time it sends their name to the State Department, they don’t have enough time to resolve the debt and allow the IRS and the State Department to lift the passport restrictions. Critics would also like the notices the IRS sends to individuals to be clearer about situations that are exempt from the law.

Not everyone who owes back taxes is subject to having their passport applications denied, according to CNBC.

The network reports that those who are paying their debt through an installment agreement with the IRS are exempt, as are those in bankruptcy, are victims of tax-related identity theft, are negotiating with the IRS to pay less, or are working out an installment plan.

Those who are subject to the passport enforcement are informed by letter.

“My first piece of advice would be, OK, you got the letter. Now make sure it’s accurate,” said David McKeegan, co-founder of Greenback Expat Tax Services.

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