President Obama recently signed into law The Fixing America’s Surface Transportation Act also known as the “FAST Act”. What people may be surprised to learn is that this new law also adds Section 7345 to the Internal Revenue Code which provides in part as follows:
“(a) In general.—If the Secretary (of State) receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport….”
Think about this for a second. Your passport will now be used against you as a collection tool. If notified by the IRS, the Secretary of State may pull your passport; refuse to renew it or even to issue you one in the first place. The monetary threshold for a “seriously delinquent tax debt” is only $50,000. Once you consider this includes interest and penalties, it is easy to see how quickly this threshold can be met.
As with every law there are exceptions. For example, the FAST Act does not apply if you have a tax debt over $50,000 but you are paying this down under an agreement known as an “offer and compromise”. Another situation where this law would not apply is if you are fighting the “seriously delinquent tax debt” under the “innocent spouse doctrine”.
The take away here is pay your taxes! If you have foreign travel plans, know where you stand with the IRS. Also, keep in mind that international travel sometimes has a way of sneaking up on you. By this I mean, boarding a cruise ship in Florida and island hopping is international travel. It will be interesting down the road to see how this plays out in the courts. I can easily imagine this being challenged on a constitutional basis. Does this unreasonably restrict our fundamental right to travel? If you have any questions, please feel free to contact Doug Leavitt at Danziger Shapiro & Leavitt, P.C.
This entry is presented for informational purposes only and does not constitute legal advice.