Congress granted the IRS the power to revoke passports in December 2015. Under this law, if you owe more than $51,000 to the IRS, then you could lose your passport. This program does not inspire confidence: here is an unelected bureaucracy (the IRS), which is not always transparent or competent, meddling in the freedom of international travel. The Tax Advocate and others have criticized the program.
Mechanics of the Process
Additionally, the process is cumbersome and bureaucratic because it involves both the IRS and the State Department. The IRS must first get around to certifying a tax debt and then pass that information to the State Department. Then, the State Department must process the IRS’s certificate and actually go through its process to revoke or deny renewal of a passport. In early 2018 the IRS warned that it was starting to certify tax debt and send requests to revoke passports to the State Department.
My Clients’ Experiences
In the past two years, I have had approximately 20 clients who have received the CP508C notice that the IRS sent to the State Department, not to issue or renew their passport. The IRS is not required to warn the delinquent taxpayer that it is sending notice to the State Department. It just does so.
However, this notice has only been issued to clients with more than $50,000 in taxes due, and when those taxes are at least a year delinquent. Moreover, I still don’t have a single client whose passport was actually revoked by the State Department. In a few clients’ cases, the State Department was notified 3 and 4 years ago of the delinquent taxes. I don’t know what accounts for the lack of follow-through in revoking passports by the State Department. I don’t know if State, like the IRS, is so seriously underfunded that it lacks the manpower to process the denials, or if this was always just a scare tactic on the part of the IRS with no bureaucratic intention by State to follow through.
If you get notice that your passport is at issue (it will probably arrive by Notice CP508 from the IRS), call me. At minimum, it’s time for us to speak to the IRS about how to resolve your tax debt. The IRS generally gets friendlier when you actively deal with the situation.
June 9, 2021