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Can the IRS Seize Your Passport? A Comprehensive Guide for Digital Nomads and Expats

In today's increasingly global world, we've seen a significant rise in the numbers of expats and digital nomads. However, along with this trend comes an amplified need for awareness around tax compliance. The IRS has started utilizing several tools to enforce these taxes, and one such powerful tool is passport revocation or denial. This tool, born from Section 7345 of the Internal Revenue Code, has vast implications, particularly for those who reside or work outside the US or frequently travel internationally.

What Is the IRS's Stance on Delinquent Taxpayers and Passports?

You may be wondering if your passport is at risk due to unpaid taxes. The IRS officially labels a taxpayer as "seriously delinquent" when they owe $50,000 or more in taxes. This figure includes both the core tax amount and any added penalties or interest. The moment a Notice of Federal Tax Lien or a levy is issued against you, the IRS alerts the US State Department.

What Actions Does the State Department Take?

Once the State Department receives certification from the IRS about your seriously delinquent tax status, they are legally required to take action. This can range from denying an application for a new passport, revoking an existing one, or placing limitations on it. For digital nomads, expats, or regular overseas travelers, this move can significantly hinder your ability to move freely.

What Can You Do If You're in This Situation?

If you're facing this daunting scenario, it's crucial not to delay. The faster you act to resolve your tax liability, the higher your chances of keeping your passport intact and your travel plans unscathed.

Once you receive a notice from the IRS, you generally have 90 days to prove your innocence to the State Department. You must be able to demonstrate one of the following: the debt is not legally enforceable, the certification was in error, you have paid the balance in full, or you have reached a satisfactory resolution arrangement. If any of these circumstances are validated, the IRS will alter the status of your certification within 30 days.

Consult a Tax Professional

The steps mentioned above only scratch the surface of potential resolutions. The intricacies of filing taxes, particularly when dealing with the possibility of passport revocation, can be overwhelming. It's always beneficial to seek advice from a tax professional who can guide you through the process and present the best course of action tailored to your unique situation.

Being an expat or a digital nomad comes with its own unique challenges, particularly when it comes to taxes. As the IRS continues to tighten its grip on tax compliance, staying informed and proactive is more critical than ever. If you find yourself facing a seriously delinquent tax status, don't hesitate to act. Your freedom to explore the world depends on it.


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