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What the State Department giveth, the IRS may taketh away p2

Did you know that your passport can be revoked if you owe more than $2,500 in unpaid child support? It seems odd, if only because the state of Minnesota tracks child support debt and the Department of State issues passports. Nevertheless, the state assembles a list of noncustodial parents who are seriously behind on child support payments and forwards those names to the State Department, which in turn will refuse to issue or to renew the debtor's passport and will, given the opportunity, revoke his or her passport.

Since early December 2015, the same has been true for taxpayers who are seriously delinquent on federal tax debt. As we explained in our last post, the law allows for exceptions -- for taxpayers who are, for example, in a formal repayment arrangement with the IRS or who are pursuing innocent spouse relief.

Taxpayers who qualify for an exception should not be surprised, however, if they find themselves on the no-passport list. Because the State Department does not have direct access to tax records, the IRS will assemble the data and somehow transmit it to the State Department. As a safeguard, taxpayers whose names appear on the list will also be notified that their passport could be in danger.

Finally, the new law does make allowances for screw-ups and emergencies. A taxpayer who is erroneously denied a passport is allowed to petition the court for injunctive relief. Taxpayers may also apply for relief if there is an emergency or for humanitarian reasons.

What taxpayers need to understand is that having a passport revoked does not only affect a citizen's ability to leave the country. Without a passport, you cannot re-enter the country, either.

And, if you are stuck in a foreign country while you try to repay your tax debt, you may soon find yourself stuck in Foreign Account Tax Compliance Act issues.

If you have a tax debt that you cannot clear up in one fell swoop, consider working with an experienced tax attorney.

Source: Forbes, "New Law Warns Delinquent Taxpayers: Pay Up Or You Could Lose Your Passport," Kelly Phillips Erb, Dec. 6, 2015

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