Previously, we mentioned a bill currently before Congress that would allow the IRS to suspend a person’s passport if they were found to be delinquent in their taxes. Senate Bill 1813, also known as the Moving Ahead for Progress in the 21st Century Act ,was introduced in November 2011 and has passed the Senate and moved on to the House of Representatives.
The bill (starting on page 1447 of the link above) states that any individual who owes $50,000 or more to the IRS may be subject to “action with respect to denial, revocation, or limitation of a passport.” The bill does allow for exceptions in the event of emergency, humanitarian situations, limited return travel to the U.S., in cases when any tax debt is currently being repaid in a “timely manner,” or when collection efforts have been suspended. However, the bill is missing any specific language requiring a taxpayer to be charged with tax evasion, fraud or any other crime in order to have their passport revoked. Basically, if a taxpayer owes more than $50,000 in back taxes, the IRS will be able to send their name to the Secretary of State for suspension of their passport; provided that the IRS has either already filed a public lien or assessed a levy for the outstanding balance.
The bill has caused a bit of a stir, with opponents claiming that it may be unconstitutional. However, there is precedent for upholding such a provision. For example, the State Department routinely screens and denies passport applications to people who owe delinquent child support. Furthermore, the IRS frequently withholds the payment of refunds if an inquiry with other state or federal governments turns up a delinquency.
While the bill is likely to face stiff opposition in the Republican-controlled House, it may ultimately pass, as it is projected to raise an estimated $750 million in additional tax revenue at a time when this country is sorely in need of funds. Furthermore, the revenue would not necessarily be the result of a tax increase, but rather the collection of taxes already due. If the bill does pass, expect it to add another level of complexity to an already extremely over-complicated tax code.
As the IRS continues to step up enforcement, taxpayers can expect to continue to see harsher collection measures like the one in this bill. This is why the best answer is to stay on top of your taxes and contact an experienced tax professional if you find yourself in trouble with the IRS. While the answer to some of life’s problems may be to just ignore them until they go away, tax issues are certainly not one of those problems.