If you still have a large unpaid tax bill, watch out. 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 seriously delinquent tax debt (SDTD).
You have an SDTD if 1) you owe more than $53,000 (as indexed for inflation) in back taxes, penalties and interest, 2) the IRS has filed a Notice of Federal Tax Lien, and 3) the period to challenge the lien has expired or the IRS has issued a levy.
Should you find yourself in this situation, there are several steps to take to avoid losing your passport. First, 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 according to an approved installment agreement, accepted offer in compromise or settlement agreement with the Justice Department.
Requesting a collection due process hearing regarding a levy, or having collection suspended through a request for innocent spouse relief, may also enable you to retain your passport. In addition, the IRS typically 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.