When U.S. citizens in New Jersey owe the IRS money, the last thing it wants is for them to fly the coop. CNBC notes that the remedy Uncle Sam may take is to revoke the passport of the debtor. This may not happen for smaller debts. However, debts in excess of $52,000 could cause the agency to take action whether the individual is at home or abroad. If the person attempts to apply for a passport for the first time or renew an old one, that may get denied as well.
The IRS has been enforcing this law since 2018. However, it now refers these cases to the U.S. Department of State. Since the program first began, the agency informed over 400,000 people that they risked losing their passport. Taxpayers who have not resolved the remaining debt may receive a letter from the IRS letting them know that the revocation request may now be forwarded to the State Department. Debtors reportedly have a 30-day window to respond.
While most Americans do not own a passport, all American expatriates working overseas do. This may cause the law to affect them disproportionately. What is worse is that because these Americans are away from home, they may not know about the notice when it arrives and therefore miss the 30-day window to respond.
According to the IRS, if an American overseas has their passport revoked, the State Department may issue a new, limited one. This limited validity passport only serves the purpose of returning to America. The IRS also reminds Americans that for the specific purposes of this law, other debts, such as child support or the FBAR Penalty, do not count toward the overall $52,000.