Owing Taxes May Mean Being Banned From Leaving the Country

You could be ignorant of what goes on at the IRS, but you could soon find it impossible to travel as a result of a tax debt that you have not settled.

By Nicholas Muiruri

If you are wondering what this is all about, read on.

The infrastructure spending bill is now ratified and is part of American laws. This was after President Obama signed the bill. If you may recall, the legislation had a provision that many people regarded as controversial. That provision is found in section 7345 of the Internal Revenue Code. The Code, if it affects you, could render it impossible for you to travel outside the U.S. using an American passport.

Are you still in limbo? Well, the contentious section goes by the title “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” To understand the effect of the new law, recall that, in 2012 the Government decided that it would only issue passports to people with no outstanding federal tax debts.

However, there are no clear guidelines on how the government will enforce the new law. The state authorities have numerous options available. These include non-issuance of new passports, non-renewal and rescission of current passports. Fortunately, the legislation only applies to individuals with a tax debt of $50,000 and above.

Ordinarily, the provision applies where an individual has a levy to offset or is under lien. Moreover, if a taxpayer has a federal tax debt and has engaged the IRS in attempts to clear the same, the condition will not apply. Efforts to remove an outstanding tax debt may include installment payments. On the other hand, the aggrieved party might have contested debt collection efforts made by the IRS. In such circumstances, Section 7345 would not apply.

At the same time, David Kautter from RSM stated in the Wall Street Journal that some of the effects of the new law were not new at all. For instance, Kautter recalled that where one owed more than $2,500 in child support payments, they could not enjoy passport issuance and renewal benefits.

Whether you deem it fair or not, the IRS will ensure that you are in good standing in as far as federal taxes go before you can secure an American passport. You now know how the new law will affect your passport status. Check your tax status again and ensure that you do not owe Uncle Sam, otherwise, you may have to postpone your travelling plans.

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