IRS Debt

Plan on Leaving the Country? Maybe Not if Your Tax Debt is Too High

Did you know that you could be denied a passport or have your passport revoked for excessive tax debt? You certainly can. In fact, it’s a program that has been in effect for a while – though it’s only recently come to the attention of the media. The program – codified by the FAST Act – has been in effect since 2015. This action is not something that can happen overnight, or if you owe less than $51,000 in federal taxes. A notice of federal tax lien must be filed and noticed given that all administrative remedies have either lapsed or been exhausted, further a levy must be issued for the tax debt. However, under certain circumstances, even those more than $51,000 may be exempt from this penalty.

Exemptions are as follows:

  • If the tax debt is being paid on time under an IRS-approved payment plan.
  • If an offer in compromise has been made and accepted by the IRS and is being paid in a timely fashion.
  • If a settlement has been agreed to with the Department of Justice.
  • If a due process hearing has been requested regarding a levy issued to collect the debt.
  • If a request for innocent spouse relief has been filed, though this is only a suspension until the request is accepted or rejected.
  • If the tax debt has been incurred as a result of identity theft.
  • If the IRS has determined that the debt is not currently collectible due to hardship.
  • If the debtor lives inside a federally declared disaster area.
  • If there is a request pending before the IRS for an installment agreement.
  • If an offer in compromise is pending before the IRS.
  • If the IRS has accepted an adjustment that will satisfy the debt.
  • If the debtor has filed for bankruptcy in a federal bankruptcy court.


The IRS is required to notify that you have a seriously delinquent tax debt and if this debt meets the $51,000 threshold for informing the State Department. And no, the IRS will not ask the State Department to recertify your passport if you pay off the $1000 to bring it under the $51,000 threshold. The State Department must also inform you in writing that your application for a passport is denied or that your current passport has been revoked. Once you meet any of the above criteria for exemptions, your application can be approved, and your passport will be recertified or reissued. If you are overseas at the time your passport is revoked, you should seek out an Embassy or Consulate to receive a limited passport that will allow you to travel directly to the United States.


You are Not Stuck

Even if you have received a notice that your passport application has been denied or your passport has been suspended, all is not lost. It stands to reason that if you owe $51,000 in back taxes, that you have other money issues as well. Money issues rarely come in just one flavor, you could be carrying student debt, a mortgage, and automobile loan, and lots of credit card debt. Proceeding without any legal advice whatsoever is not advised. Working with a tax attorney and also with a lawyer familiar with debt and with bankruptcy is your best bet for resolving your current issues. Yes, it is going to cost money, but so is paying down $51,000 without doing your level best to reach an offer in compromise or settlement.

However, if you need that passport, will not get it back until an offer in compromise or settlement is accepted. If your overall debt is crippling and meets the standard for bankruptcy, it is possible to get your passport application approved or have your passport recertified or reissued. Once your bankruptcy petition is filed and accepted you are eligible for an exemption. This exempt status is especially important if you need to travel for work or have other business properties that are overseas. Bankruptcy is a complex legal proceeding, and it should not be undertaken – especially in conjunction with other legal matters – lightly or with the intent to mislead the court. Penalties for tax evasion can be harsh and may even include doing some hard time.

Deciding on Bankruptcy

Bankruptcy is never an easy decision. People go through a variety of portions in order to avoid bankruptcy and the stigma surrounding. What people often fail to understand is that bankruptcy is a constitutionally protected right of every citizen. When your debt is overwhelming, when despite having a good income cannot keep up with payments and are even underwater when it comes to income versus expenditures, then it is time prepare for a bankruptcy consultation with an experienced attorney. You may be able to keep your vehicle, your home, and your business depending upon the individual factors of your debt and bankruptcy filing. You’ll be able to travel freely in and out of the country as needed to attend to business or family needs.

Bankruptcy also grants the debtor an automatic stay from lawsuits, garnishments, foreclosures, and other legal action. A simple bankruptcy such as Chapter 7, or a more complicated bankruptcy such as Chapter 11, Chapter 13, Chapter 15, or even a Chapter 20 bankruptcy offers debtor’s breathing room and access to expert counsel when it comes to handling their debt.

Getting Help With Tax Debt

Bankruptcy is not the answer to all debt problems. Only an attorney can counsel you in filing bankruptcy, and bankruptcy is a specialty practice. Van Horn Law Group is there when you need experienced counsel that you can trust. The initial consultation is free at either our Fort Lauderdale or West Palm Beach office, and we are open seven days a week. We are here to help you when you feel as if you’re drowning in debt and can’t find a way back to dry land. If you are facing an ever-increasing wave of creditors and are worried about losing her ability to travel and obtain your livelihood, call us and schedule that consultation. We know bankruptcy, we know debt, and know we can help.

Published by
Chad Van Horn

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