f you have a large unpaid federal tax bill, beware. 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 a seriously delinquent tax debt (SDTD).
How large does the debt have to be to qualify? In 2022, you have an SDTD if the following are true: you owe more than $55,000 (adjusted for inflation) in back taxes, penalties and interest; the IRS has filed a Notice of Federal Tax Lien; and the period to challenge the lien has expired or the IRS has issued a levy.
If this is your situation, you may be able to avoid losing your passport by taking certain steps. 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 with an approved installment agreement, an accepted Offer in Compromise or a settlement agreement with the U.S. Justice Department.
Also, you might be able to retain your passport by requesting a collection due process hearing regarding a levy, or by having collection suspended through a request for innocent spouse relief. Typically, the IRS 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.