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Unpaid Tax Debts? The IRS May Be Able to Revoke or Deny Your Passport in 2016

There have always been significant penalties for people who have unpaid taxes. However, the IRS is constantly taking steps to increase the punishments in these cases, as a means of deterring people from neglecting to pay their taxes in the future. There are currently some very heavy fines and other penalties for people who are very late on their taxes. These serious penalties apply to people who are delinquent on back taxes or many years. Now there is a new bill that would allow the IRS to submit lists of people who they believe should have their passport restricted or cancelled because of unpaid taxes.

This bill has already made its way through the United States House and Senate, but it is not fully implemented yet. The bill has a stipulation that allows for the revocation, denial or limitation of a United States citizen’s passport if the citizen in question owes more than $50,000 in back taxes to the government. This $50,000 is not limited to the actual back taxes, but it also includes penalties and interest on the money that is owed to the government. The cancelation or limitation of the person’s passport is only possible in cases where the IRS has already filed a lien against the person in question.

This is an incredible move and really shows how serious the IRS is getting about collecting back taxes. One of the reasons why the IRS keeps adding harsh penalties is that they want to deter people from trying to defraud the government on their taxes. It costs money to go after every tax dodger, and the IRS would save a lot of money if people stopped neglecting to pay their taxes.

However, there are critics of this action that say there are unintended consequences of the bill that would harm millions of Americans. The people who are most likely to face the brunt of this bill are expatriates who are living in foreign countries. These American citizens work and earn money in another country, but are subject to FATCA regulations regarding their bank accounts. If any of these expats are facing issues with the FATCA or related tax penalties, they could find themselves in a situation where their passport is revoked while they are in a foreign country.

It may seem as though the average expat would struggle to reach $50,000 in owed taxes to the IRS, but tax lawyers believe that the amount is not hard to reach given the strict laws on offshore accounts.