Under a new law expected to take effect in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category. The list of affected taxpayers will be compiled by the Internal Revenue Service using a threshold of $50,000 of unpaid federal taxes, including penalties and interest, which would be adjusted for inflation.
In most cases, the passport provision would apply if a taxpayer is subject to a lien, which advises creditors of a debt to the IRS, or a levy, which gives the IRS the authority to seize assets. It wouldn’t apply if a taxpayer is in the process of resolving tax debt with the IRS, such as by paying it on an installment plan, or if the taxpayer is contesting the collection either administratively or in court, said David Kautter, a partner at the accounting firm RSM in Washington.
If enacted in current form, the law would take effect on Jan. 1 and would apply to existing tax debts. According to estimates by the Joint Committee on Taxation, the measure is expected to raise $398 million over 10 years.
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