While owing money to the IRS can cause turmoil, it doesn't necessarily mean that you're ineligible to apply for a passport. In this blog post, we'll dive into the details and explain the eligibility requirements and the steps you can take to secure a passport despite owing money to the IRS. So, let's explore this nuanced topic and give you a clearer understanding of the process.
What is a passport?
A passport is a vital travel document that proves your identity and nationality. It is required for international travel and allows you to enter and exit countries. Without a passport, you may not be able to leave your home country or return easily. Thus, obtaining a passport is critical for those who want to travel, work, or study abroad and explore the world. [1][2]
What does the IRS have to do with me getting a passport?
The relationship between the IRS and passport applications is important to understand. If you owe a delinquent or serious tax debt to the IRS, your passport application may be delayed or even denied. The IRS can identify your tax debt as seriously delinquent and notify the US Department of State, leading to revocation or limitation of your passport. It is crucial to resolve any tax issues with the IRS before applying for a passport.
The IRS Passport Program
Is a process designed by the Internal Revenue Service to identify individuals who owe tax debts, including serious and delinquent ones. If you owe more than $50,000 in unpaid taxes, the IRS can seize your passport.
This program is designed to encourage taxpayers to resolve their tax debts before traveling. It's important to note that if you apply for a new passport or have a seriously delinquent tax debt, the IRS cannot issue a passport until your tax debt is resolved.
Factors affecting passport applications
Applying for a passport can be affected by delinquent or serious tax debts. Delinquent tax debts over $59,000 will be certified to the State Department, which means your application may be denied or your current passport revoked.
Exceptions include those with payment agreements, innocent spouse requests, or located in disaster areas. It's important to resolve tax debts before applying for a passport to avoid any delays or denials.
What is considered delinquent tax debt?
Delinquent tax debts refer to unpaid federal tax debts that have been filed as an official Notice of Federal Tax Lien, with all administrative remedies exhausted or lapsed. These can include U.S. individual income taxes, Trust Fund Recovery Penalties, business taxes for which taxpayers are personally liable, and other civil penalties.
The IRS can certify these debts to the State Department, leading to potential restrictions on passport applications and renewals. However, there are exceptions and relief options available for taxpayers who take appropriate actions to resolve their tax debts.
What is a serious tax debt?
Serious tax debt is unpaid, legally enforceable federal tax debt that includes penalties and interest. If the Secretary of the Treasury informs the IRS that you have seriously delinquent tax debt, you may not be able to obtain a U.S. passport.
However, not all individuals with tax debt are at risk of passport restrictions, and there are payment options and relief programs available to resolve tax debts and avoid the revocation of passports.
Differences between delinquent tax debt and serious tax debt
Delinquent tax debt and serious tax debt are different in terms of the amount owed and IRS actions. Delinquent tax debt refers to unpaid federal taxes, while serious tax debt is defined as unpaid tax debt of over $55,000, where the IRS has taken action to collect the debt. The IRS can revoke or limit a passport for individuals with seriously delinquent tax debt, while delinquent debt only results in a delay or denial of a passport application. It is important to resolve both types of tax debt to avoid penalties and restrictions.
IRS actions on delinquent tax debts
When an individual has delinquent tax debts, the IRS may take a variety of actions. These can include filing a Notice of Federal Tax Lien to secure the government's interest in your property, seizing or selling your property, or garnishing your wages. If the delinquent tax debt is not resolved, the IRS can certify the debt to the State Department, which could result in the denial or revocation of your passport. It's important to take action to resolve delinquent tax debts to avoid potential consequences.
IRS actions on serious tax debts
When it comes to serious tax debts, the IRS takes action to collect the unpaid taxes. This can include placing a lien on your property, garnishing wages, or seizing assets. In addition, if the debt is deemed seriously delinquent, the IRS may inform the Department of State to revoke or limit the taxpayer's passport. It's important to resolve tax debts and work with the IRS to avoid these actions.
C. Exceptions to the rules
While owing seriously delinquent tax debt can impact your passport application, there are exceptions to this rule:
Taxpayers who have an account and are determined to be currently not collectible due to hardship.
Identified as a victim of tax-related identity theft.
Living within a federally declared disaster area.
Having an IRS-accepted adjustment that can fully satisfy their tax debt.
Are not subject to passport restrictions. Additionally, taxpayers serving in a designated combat zone or participating in a contingency operation may have their certification postponed.
How to Resolve Tax Issues Affecting Passport Applications
For taxpayers with delinquent or serious tax debts, the IRS offers several payment options to help them resolve their tax issues and be eligible for a passport application. These payment options include installment agreements, offer in compromise, and currently not collectible status. It's important to understand that resolving tax debts is crucial, and taxpayers should seek help from the IRS to avoid passport application delays or denials.
Installment agreement
One option for taxpayers who owe money to the IRS is to enter into an installment agreement. This allows you to pay off your tax debt over time rather than in one lump sum. If you have an installment agreement in place and are making the payments as scheduled, you may still be eligible for a passport even if you owe the IRS money. It's important to note that the terms of your installment agreement must be followed in order for you to retain your passport eligibility.
Offer in Compromise
If you owe a seriously delinquent tax debt to the IRS, it can negatively impact your ability to travel abroad. However, taxpayers with significant tax debt may be able to resolve their debts through an Offer in Compromise (OIC). An OIC is an agreement between a taxpayer and the IRS that settles the tax liability for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay. Taxpayers can use the tool to help them determine whether they’re eligible for an offer in compromise.
Currently Not Collectible
Currently Not Collectible (CNC) is a status given to taxpayers who have a delinquent tax debt but are unable to pay due to financial difficulties. While in CNC status, the IRS generally won't try to collect from you, and it won't levy your assets and income. However, interest and penalties may still accrue, and the IRS may keep your refunds and apply them to your debt. To qualify for CNC status, you'll need to contact the IRS and provide financial information for review.
Relief from IRS Actions
If you owe the IRS and your passport is at risk, you may be eligible for relief options. The IRS offers payment options such as installment agreements, offers in compromise, and currently not collectible status. Each option comes with its own requirements and qualifications, so speak with a tax professional to determine the best solution for your situation. It is important to resolve any tax debts before applying for a passport to avoid delays or denial.
Importance of resolving tax debts
It's crucial to resolve tax debts and avoid being classified as seriously delinquent by the IRS. Doing so can save you from the potential passport revocation or denial that comes with having outstanding tax debts. Plus, taking action to pay off your tax debts shows the government that you're a responsible taxpayer and can help prevent future issues with the IRS. Don't let tax debts pile up - address them promptly to avoid any negative consequences.
Final thoughts
In conclusion, it is possible to obtain a passport if you owe the IRS, but only if you have resolved your tax debt with the agency. Failure to do so may lead to your application being delayed or denied. Therefore, it is important to take prompt action if you have tax debt to ensure that you can obtain or renew a passport when needed. Seeking professional help and exploring payment options such as installment agreements and offer in compromise can provide relief and help resolve the tax issue in a timely manner.