Pay Your Taxes — Or You Could Be Stuck Stateside

If you owe the IRS $$$, they might grab you by the passport

By Diane Rommel

 
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03 February 2017

If you're behind on your taxes and plan to leave the country anytime soon — might want to get on top of that. 

A law signed by President Obama in 2015 now seems to, at last, be coming into action: Americans with over $50,000 of IRS debt may have their existing passports revoked or new ones not provided

We're not convinced this is a huge number of travelers: under half of all Americans have a passport, for starters, and presumably only a small percentage of them have over $50,000 in unpaid tax debt. But it is certainly a hardening of regulations, given that we're talking about ordinary scofflaws, not criminal tax cases. 

On the plus side: It sounds like this effort is ongoing at the IRS, with notifications issued to passport holders/delinquents in "early 2017." That means if you're headed overseas now, you're probably OK. (As they put it: "The IRS has not yet started certifying tax debt to the State Department. Certifications to the State Department will begin in early 2017." Updates will appear here.)

And crucially, the debt doesn't need to be paid — they'll accept an up-to-date payment plan. ("If you can’t pay the full amount you owe, you can make alternative payment arrangements such as an installment agreement or an offer in compromise and still keep your U.S. passport.") 

For some expats, this is unwelcome news, though less irritating than FATCA, which necessitates that foreign financial institutions report all American holdings. (Though it's ostensibly meant to reduce tax avoidance, the results are often banal yet aggravating: just try getting a checking account overseas post-FATCA.) Dismantling FATCA was a plank on the Republican platform. Time will tell how all this shakes out — but it's clear that entrance to and egress from the U.S. will remain a hot-button political issue. 

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