IRS Crackdown: US Passport Revocations Surge for Americans with Large Tax Debts

U.S. Government Intensifies Passport Revocation for Unpaid Tax Debts

The federal government has been increasingly revoking passports from Americans with significant tax debts, experts say. This enforcement mechanism, in place since 2018, is being used more frequently as a last-resort effort to collect unpaid taxes.

Under federal law, the Internal Revenue Service (IRS) and Treasury Department are required to notify the State Department when an American has a “seriously delinquent tax debt.” For 2024, this threshold is set at $62,000, including federal tax liabilities, penalties, and interest.

“How do you get rich folks’ attention regarding paying their taxes? Just make sure they can’t summer in Europe,” said Troy Lewis, a certified public accountant and accounting professor at Brigham Young University.

The consequences for travelers can be severe. Those with revoked passports may be unable to travel internationally until their debt is resolved. This can particularly impact expats and business travelers who may find themselves indefinitely grounded in the U.S.

Todd Whalen, founder of Advanced Tax Solutions in Denver, has observed an uptick in these cases over the past three years. “This is becoming more and more of a big deal,” Whalen said. He recounted an instance where a client discovered his passport had been revoked at the airport while attempting to fly to Mexico for a family celebration.

While the State Department declined to provide specific statistics on passport revocations, the impact is clear. With a record 21.6 million U.S. passport applications in fiscal 2023, the potential for disruption is significant.

Experts emphasize that passport revocation is typically not the government’s first collection attempt. The IRS must have “exhausted” all other typical collection activities before resorting to this measure, according to Lewis.

Virginia La Torre Jeker, an attorney specializing in U.S. international tax law, noted that it can be “quite easy” for tax debts to exceed the $62,000 threshold, particularly for Americans living abroad who may face penalties for not filing various foreign information returns.

Recent court cases have upheld the federal government’s authority to revoke passports for tax collection purposes. Lewis cited Franklin v. United States and Maehr v. United States Department of State as examples where courts have affirmed this practice as constitutional.

For those facing potential passport revocation, there are remedies available. The IRS typically sends notices outlining the implications and providing opportunities to resolve the debt through payment plans or compromise agreements.

However, Whalen cautioned that sometimes these notices don’t reach taxpayers, leading to unexpected issues at airports. “A lot of times, they don’t know they have a balance due until they … show up at the airport,” he said.

As this enforcement strategy gains traction, travelers with outstanding tax debts are advised to address their liabilities promptly to avoid potential travel disruptions.