People with unpaid IRS debt can have their Passports cancelled

November 26
8:01 AM 2015

A bill that prohibits people with unpaid IRS loans from travelling is expected to become law very soon.

The Federal government has been going after travelling people who are reporting their taxes incorrectly for a very long time, but now, they plan to apprehend those with unpaid IRS loans. In a report by Forbes, which has already been approved in the Congress and the Senate. The section is called "Revocation or Denial of Passport in Case of Certain Tax Delinquencies." It is currently in conference, which means there could still be changes. It is expected to pass very soon, and will become the new section 7345 in the tax code.

In a report by The Wall Street Journal, Washington accounting firm RSM partner, David Kautter, said, "The passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn't apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court."

Congress could pass the bill early December. According to the Joint Committee on Taxation, the law could raise about $398 million in the next decade. According to iSchool Guide, the section states that the State Department can stop Americans who have "seriously delinquent" tax debts to get their new passports. The existing passports of those who have tax debts may also get cancelled. IRS will also come up with a list of people who have $50,000 unpaid federal taxes, which includes penalties and interest. Americans who are working abroad are the most susceptible to this new law.

The idea for this law started in 2012 as the Government Accountability Office reported that tax collection can be done through the issuance of passports. Sen. Harry Reid and then Sen. Orrin Hatch got on board and came up with the bill.

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