We aren’t Joe

Passport Cancellations can be Catastrophic

In 2015, Congress mandated a process through which taxpayers owing “seriously delinquent tax debt” could have their U.S. passports either non-renewed or outright canceled.

This a tool previously used by Congress to rein in undesirable conduct. Child support arrears and certain felons trigger passport restrictions. Now, those who are “seriously tax delinquent” come in the mix.

The IRS puts together a list of people, transmits it to the State Department, who takes action. Over 360,000 taxpayers risk having passport restrictions. What about cancellation?

When this issue came up I told ‘at risk’ readers (those with around $50,000 in federal tax debt and over) to renew passports immediately before procedures were set up, giving them more breathing room. But the law provides for either non-renewal or cancelation.

The IRS recognizes cancellation as more drastic and has waited to see how non-renewal, the softer remedy, works.

It seems they are ready to roll out cancelations soon. Warnings have come out.

For Joe the Plumber, at home in Tulsa, a passport cancelation may not matter much. Joe’s daily activities don’t require a passport and he does not travel overseas often. But, we aren’t Joe. 
A canceled passport does not melt away like the Wicked Witch of the West, nor does the IRS “police” come, sirens blaring, to yank it away from you. But when you try to use it, you may unpleasantly learn it’s no longer good. Imagine coming to the U.S. for a visit and the border agent saying “welcome back, but we’re keeping your passport.” And you still need to somehow return to Mexico!
If detected by Mexican authorities, a revoked passport can cut short your stay, maybe earning a trip to the border or preventing renewal of a resident permit. No bueno!

To me, the worse thing would be if a passport were revoked without me knowing. The IRS sends several notices to the last address you used with them. Have you updated your address with the IRS? Of course, the best way to prevent a passport disaster is to keep square accounts with the taxman, second best is to proactively deal with tax debt itself … and a valid address is often an overlooked critical step in learning what’s coming. Update your IRS address via Form 8822, or through a tax return filing, or even by letter to the IRS. Just tell them. That way you won’t be surprised.

Orlando Gotay is a California licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies.  His love of things Mexican has led him to devote part of his practice to federal and state tax matters of U.S. expats in Mexico.  He can be reached at tax@orlandogotay.com or Facebook: GotayTaxLawyer.  This is just a most general outline. It is informational only and not meant as legal advice.