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New law complicates US Passport issuance

Pending legislation, H.R. 22 called Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act, is likely to be passed law next month. This law will have major implications for those with federal tax debts wishing to apply for or use a currently-held passport.

The law allows the revocation of a US passport or denial of a US passport application if a person has more than $50,000 in unpaid federal taxes. There are some exemptions, specifically those people currently involved in a “collections alternative” or those who have submitted an IRS offer in compromise, an appeal against a levy (such as a Collections Due Process Hearing), or are protected under Innocent Spouse Relief. Americans traveling for humanitarian reasons will be able to ask for an exception if they’re tax delinquent, and the new rule does not apply to people who are on an IRS payment plan or contesting a tax case in court.

The proposed law has angered some groups, particularly citizens living abroad, who may not receive the IRS’s mail, since the IRS system is not set up to deal with expatriates very well. For those people, their passports are their livelihood, and revoking them could have disastrous consequences. Such people need their passports for many purposes, including for work visas or residency permits, and who may not be receiving mail from the IRS.

Please note that simply owing taxes to the IRS will not likely result in a passport revocation or denial.  However, owing back taxes and ignoring the problem in collections will likely lead to such complications. It is important to defend yourself in case of IRS tax collections, in such a case.

It’s unknown how many people would be affected by the new law, but stay tuned. This is an unprecedented aggressive change in US tax collections law, which will likely scare many people into becoming tax compliant.