Have big tax bill? Your passport soon could be pulled

November 23, 2015

Millions of Americans are thinking about travel this holiday week. So is Congress, but on a larger scale.

As the House and Senate work out details of a long-term transportation bill, one funding road sign is clear. International travelers will help pay for domestic road and transit projects.

Passport to adventure by Mike via Flickr CCPhoto courtesy Mike via Flickr CC

Lawmakers in both chambers have agreed on a provision that would direct the State Department to deny passports to taxpayers who are "seriously delinquent" in their tax payments. State also could rescind existing passports of affected taxpayers.

The highway bill funding measure is projected to bring in $398 million over 10 years.

Kicks in at $50K: So just how seriously delinquent must you be to have your global travel documents pulled? The threshold is $50,000 in unpaid federal taxes.

The Internal Revenue Service would put together the list of taxpayers using that 50 grand mark, which would include not just due taxes, but also penalties and interest. The threshold also would be adjusted annually for inflation.

If you owe that much but are working with Uncle Sam to resolve your tax debt, say by setting up a tax installment payment plan, your passport would be safe. So would the travel papers of taxpayers who challenge their big tax bills through IRS channels or in court.

Overseas opposition: Not surprisingly, world travelers and U.S. citizens who live abroad are not happy with the passport proposal. 

American Citizens Abroad (ACA), a Washington, D.C.-based nonprofit that advocates for overseas residents, has written to Congress expressing its strong opposition to the passport revocation provision in the highway bill.

A major concern is that the Congressional proposal is too parochial. Passports are seen by many simply as the way to facilitate travel, often for pleasure.

But, notes ACA, the proposed passport revocation "discriminates against Americans abroad who, unlike Americans living in the US, are overwhelmingly reliant upon their US passports in their everyday lives."

In addition, writes ACA, the provision "creates a tax collection mechanism that is frankly far too draconian. This approach puts disproportionate pressure on the taxpayer and risks mistakes and unforeseeable consequences, which would be life-changing for the individual."

ACA wants Congress to pull the provision and delay any action until after it holds hearings and explored alternative ways to solve any perceived tax collection problems.

Unfortunately for worried world travelers with big tax bills, that's not likely to happen.

December deadline looming: This is not the first time Congress has considered passport revocation as a funding mechanism for transportation projects. An identical version was part of the 2012 Senate highway bill, but it was pulled from the final bill.

Now, however, its fate seems more secure.

Short-term funding for U.S. infrastructure and transit programs ends on Dec. 4. Since the passport provision, as well as the even more controversial one that would require the IRS to hire private debt collectors, are in both transportation bills, House and Senate conferees are likely to let them be in the final version to be hammered out after the Thanksgiving break.

So if you're planning a trip longer than the Turkey Day trek to grandmother's house and you owe a lot of taxes, you might want to start working on an IRS payment plan soon.

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