On December 4, 2015, the Fixing America’s Surface Transportation Act (the FAST Act) was signed into law. Among other items, the FAST Act gives the Internal Revenue Service (IRS) and the Department of the Treasury power to authorize the State Department to deny, revoke or limit a U.S. citizen’s passport due to a seriously delinquent tax debt. For purposes of the new law, a seriously delinquent tax debt means a taxpayer owes the IRS more than $50,000 in taxes and either a notice of lien has been filed or a levy has been made. It, however, does not include circumstances where the debt is being paid timely pursuant to an agreement with the IRS.
Once the new law is fully implemented, the State Department will not issue a new passport to anyone with a seriously delinquent tax debt, as certified by the IRS. Exceptions can be made in emergency circumstances or for humanitarian reasons. In addition, the State Department will have the right to revoke an issued passport of anyone with seriously delinquent tax debt or limit the passport only for return travel to the U.S.
In light of the new law, if a taxpayer owes the IRS more than $50,000 in tax debt, and the taxpayer plans on traveling internationally, it is advisable for the taxpayer to resolve the tax matters or at least reach an agreement with the IRS to resolve such tax matters before the taxpayer travels outside the U.S.
It is worth noting that the new law merely requires the Treasury Department upon receiving a certification from the IRS of a person's seriously delinquent tax status to forward that certification to the State Department for it to deny, revoke or limit the person’s passport. It will likely take the IRS and the State Department some time to issue implementing regulations and formal procedures to enforce the new law. We will monitor the progress of the issuance of such regulations and procedures.