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Tax debt and passports

| Jul 17, 2018 | back taxes or tax debt

Many Maryland residents will not be allowed to apply for passports or renew their existing travel documents due to their unpaid taxes. Federal officials are renewing their efforts to enforce a 2015 law passed by Congress that compels the Internal Revenue Service and State Department to revoke or deny passports for individuals with tax debts of at least $51,000.

The IRS has released updates on their enforcement of this law, which became effective in February 2018. According to an IRS spokesperson, as many as 362,000 people are not qualified for a renewal or issuance of a passport because of their tax debt. The IRS will transmit the names of these individuals to the State Department.

According to a State Department representative, passports have already been denied to individuals with tax debts. An IRS official also stated that instead of revoking passports for people with tax debts, the authorities are just denying the passports.

Individuals who currently hold passports and have a tax debt of at least $51,000 can still travel outside of the country. However, they won’t be allowed to renew their passports. Those who have tax debts but have not yet obtained a passport will be rebuffed if they submit an application for a new one.

As of June 2018, individuals have paid $11.5 million in order to resolve their tax debt and receive their passports. In addition, 1,400 people have agreed to make installment payments.

A tax law attorney may help a client resolve their federal or state tax disputes. For example, legal counsel could serve as the client’s tax representative in communications with the IRS or state tax agency. The lawyer might find ways to have late filing penalties or late payment assessments reduced or waived.