In addition to costly fines and penalties and the threat of possible time behind bars, the Internal Revenue Service just gave taxpayers another motivating reason to pay their taxes one time. Earlier this month, members of the U.S. Congress passed a major highway and transportation bill known as the Fixing America's Surface Transportation Act or FAST Act.
What, you may ask, does the FAST act have to do with paying my taxes? It turns out that, as is so often the case with many of these massive legislative acts, a provision was included that gives the Internal Revenue Service the power to deny, limit or outright revoke the passports of U.S. taxpayers.
The new law applies to taxpayers who the IRS identifies as having unpaid tax debt in the amount of $50,000 or more. For taxpayers who have no desire or plans to travel abroad, this law may not be cause for concern. However, sometime during 2016, the last provision of the Real ID Act will go into effect which affects domestic air travel. As part of the Real ID Act, anyone who wishes to fly on a domestic flight in the U.S. must have either a Real ID or a passport. This is bad news for residents in the four states; which include New York, New Hampshire, Minnesota and Louisiana; that failed to adopt state Real IDs.
In addition to applying to taxpayers who are reported to have outstanding tax debt in the amount of $50,000 or more, the passports of taxpayers against whom tax liens have been filed in the amounts of $50,000 or more may also be denied or revoked. Additionally, U.S. citizens living abroad who the IRS identifies as having tax debt are also subject to the new law and the stakes are much higher for expats as a passport is typically required for everything from registering a child for school to opening a bank account.
Source: Forbes, "Passports Required For Domestic Travel In 2016, But IRS Can Revoke Passports For Taxes," Robert W. Wood, Nov. 25, 2015