US Expats with Tax Debt and Revoked Passports

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Expats in Jeopardy of Losing U.S. Passports

The IRS began sending letters to indebted taxypayers in July, stating they will be asking the U.S. State Department to revoke their passports.

People who live abroad and receive the letter have 90 days to call the government and set up a payment plan, the IRS said in an email. For domestic taxpayers a response is required in 30 days.

A valid passport is often a requirement for acquiring a work visa, obtaining a mortgage, or opening a bank account overseas—making passport revocation a serious problem for U.S. citizens living and working abroad. It can also curtail their ability to travel between countries.

The IRS has the authority to ask the State Department to deny or revoke passports of taxpayers with “seriously delinquent tax debt” of $52,000 or more under a provision in the 2015 Fixing America’s Surface Transportation Act. The agency began implementing the program at the beginning of 2018.

The agency had sent almost 389,000 certification notices to taxpayers as of May 17 this year, according to the Taxpayer Advocate Service. The notices warn people that they’ve been identified as having substantial tax debt and could face repercussions under the passport program. The IRS can direct the State Department to deny passport applications or renewals until an agreement for paying back the IRS is reached. The agency may request revocation of an individual’s passport in more extreme cases.

IRS Tax Law and Expats

The rules for expatriates are complicated, making errors on the part of both taxpayers and the IRS common.

U.S. expats are required to file U.S. taxes and report their income even if they are permanent residents or citizens of a foreign country. There are some benefits and special rules that can be applied to reduce double taxation. They are also obliged to report their foreign assets under the Foreign Account Tax Compliance Act.

Concerned About Losing Your Passport?

A valid passport is often a requirement for acquiring a work visa, obtaining a mortgage, or opening a bank account overseas—making passport revocation a serious problem for U.S. citizens living and working abroad. It can also curtail their ability to travel between countries.

If you have questions about your personal tax situation, and would like to get into compliance with the IRS - please contact our office.  We offer a free initial consultation, which is of course confidential.