Ask anyone who has gone abroad about their experience, and chances are good that you'll be treated with great enthusiasm to stories, pictures and even travel advice. However, if you were to ask them about their preparations for their journey, you may get an entirely different response.
That's largely because planning for a trip abroad can prove to be a herculean effort complete with all sorts of onerous tasks from planning itineraries and packing to getting vaccines and, of course, a passport.
Interestingly enough, those people owing taxes to the federal government might now find this last item to be exceptionally difficult thanks to the so-called IRS passport provision buried within a massive transportation bill passed by Congress and signed into law by President Obama just nine months ago.
What exactly does this new law say?
The new law provides that upon receiving notice from the IRS of a tax debt of more than $50,000, the State Department can limit, revoke or deny passports to U.S. citizens living here and abroad.
Does this mean that only a person seeking to secure a new passport could run into trouble?
No. The law not only applies to the issuance of new passports, but also renewals. In fact, it technically gives the State Department the right to rescind/cancel an otherwise valid passport.
Why was the tax debt threshold set at $50,000-plus?
Experts indicate that the belief was likely that a $50,000-plus tax debt threshold for taking a passport would apply mostly to those people with considerable resources or who had demonstrated a serious pattern of noncompliance.
However, experts also indicate that it's very easy for someone to cross this $50,000-plus threshold when interest and penalties are included.
Are there exceptions?
Those who challenge their proposed tax bill would be permitted to travel, as a contested tax bill is not technically considered a tax debt. Furthermore, travel would be permitted where the person is making regular, timely payments via an installment agreement or something similar.
The law also permits the State Department to issue passports for humanitarian purposes or emergencies, but experts say the details of this exception remain unclear.
Consider speaking with a skilled legal professional as soon as possible if you find yourself at the center of an IRS investigation, as the stakes are very high.