How a ‘Seriously Overdue Tax Debt’ Could Get Your Passport Revoked

Travelers be warned: The federal government can revoke your passport if you ignore a big tax bill.

Such punishments have become more common in recent years, experts say.

Federal law requires the IRS and the Treasury Department to notify the State Department if an American has a “severely delinquent tax debt.”

That’s a big federal debt — more than $62,000 in 2024 — that the taxpayer has repeatedly ignored.

The debt limit includes a person’s total federal tax liability, plus penalties and interest. Adjusted annually for inflation.

The State Department in general will not be issued new passport and can revoke or limit an existing one in cases of serious delinquency, according to the Tax Office.

The government routinely uses this enforcement mechanism — which has been put in place from 2018 — as a kind of last-ditch effort to collect unpaid tax contributions, experts said.

If these debts remain unpaid, the potential consequences are plentiful: Travelers may not be able to travel abroad until they resolve their debt. Expats and those traveling abroad for business may have to return to U.S. soil indefinitely until their tax case is settled, for example, experts said.

Revoking a passport is “a last resort,” said Troy Lewis, a Draper, Utah-based CPA and professor of accounting and taxation at Brigham Young University.

“How do you get the rich to pay their taxes? Just make sure they can’t spend the summer in Europe,” he said.

Demand for overseas travel has increased as the Covid-19 pandemic has subsided. Americans application for about 21.6 million US passports in 2023 — a record number, according to the State Department.

Todd Whalen, a CPA based in Denver, has seen tax enforcement efforts involving passports increase over the past three years.

“This is getting bigger and bigger,” said Whalen, founder of Advanced Tax Solutions, which helps consumers and businesses resolve tax debt. “We’ve got quite a few [cases] this year.”

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In one case, a client only discovered his passport had been revoked while at the airport trying to fly to Mexico for a trip to celebrate his son’s high school graduation.

“It’s working,” Whalen said of the collection effort. “It gets people calling [the IRS].”

A State Department spokesman declined to provide annual statistics on how many taxpayers had their passports revoked or denied. The IRS did not comment by press time.

It can be “very easy” for overdue tax debts to exceed the $62,000 threshold, according to Virginia La Torre Jeker, a US attorney specializing in international tax law.

Americans living abroad, for example, can face “significant penalties” for not filing various foreign intelligence returns, he said in an email.

Debts can also include any tax contributions owed by individuals, he added. Those can be business taxes for which the taxpayer is personally liable or trust fund recovery penalties, he said. (The latter relate to income and employment taxes withheld, such as Social Security taxes or railroad retirement taxes.)

However, revoking a passport is not generally the first way to collect such arrears, experts say.

The IRS must have already “exhausted” all other standard collection activities, said Lewis, owner of Lewis & Associates, CPA.

Generally, this would mean that the taxpayer has not responded to previous IRS notices of a federal tax lien, for example. (The privilege is the government’s legal claim on assets of a debtor such as real estate and other personal property. However, this is not a move to collect the property in question.)

Several courts have upheld as constitutional the federal government’s ability to revoke passports to collect tax debts, Lewis said.

He cited two recent cases as examples: Franklin v. United States to the US Court of Appeals for the 5th Circuit and Maehr v. United States Department of State to the US Court of Appeals for the 10th Circuit.

In the first, the defendant, James Franklin, owed about $422,000 in taxes because he failed to file accurate tax returns and failed to report a foreign trust of which he was the beneficial owner. The IRS eventually filed a tax lien and collected his Social Security benefits, and the State Department later revoked his passport.

“It seems pretty well documented that this is a thing [the government] can do,” Lewis said.

The State Department does not immediately revoke a passport. When the IRS certifies the debt as seriously delinquent and notifies the State Department about it, it will mail the taxpayer a notice— CP508C — describing the potential implications of this classification.

If a person then applies for a passport, the State Department will generally deny and close that application if the person makes no effort to pay their debts. Such efforts may include paying off the balance in full, entering into a payment plan, or making a compromise agreement with the IRS.

The debtor could still use active passport, if they have one, unless notified in writing by the State Department that their passport has been revoked or restricted, the IRS said.

“The IRS looks at a number of factors, including taxpayers’ past noncompliance and taxpayers’ inability to cooperate with the IRS” when choosing to revoke a passport, according to La Torre Jeker.

The State Department can limit the use of the passport to only return trips to the U.S., preventing the person from being “trapped in limbo” if they are out of the country, he said.

The IRS sends taxpayers the 6152 letter before revocation, asking them to call the IRS within 30 days to resolve their account and avoid passport cancellation, he added.

But sometimes a passport denial catches debtors by surprise when they travel, Whalen told Advanced Tax Solutions.

For example, the IRS can have the wrong address on file — especially if a taxpayer has moved — and mail notices to the wrong place, Whalen said.

“A lot of times, they don’t know they have a balance due until they … show up at the airport,” he said.