How Back Taxes Can Affect a Passport Application

Can owing back taxes to the Internal Revenue Service (IRS) hinder your ability to obtain a passport?  Should you even bother applying for a passport if you are behind on your taxes with the IRS? The answer to that question depends entirely on your specific situation. 

Back Taxes and Your Passport

If you are simply behind on your taxes and are working with the IRS to rectify the situation, you will most likely not have a problem obtaining a passport and traveling outside the country.  This is the situation is often the case for most taxpayers having difficulty with the IRS.  They are either having financial troubles or have inadvertently made errors in their tax filing, and are in the process of correcting the problem with the IRS.  In such cases, there is typically no problem with the taxpayer’s effort to travel outside the country legally with a passport.  If this describes your situation, you needn’t avoid applying for a passport. 

Criminal Non-Payment of Taxes

However, if you are being investigated for trying to defraud the IRS out of tax money or for being criminally negligent in not paying your taxes, you can have your passport application denied.  In such cases, the IRS will conduct an in-depth investigation of your situation to determine if you are illegally and criminally failing to pay your taxes.

There are several situations that the IRS will consider criminal nonpayment:

  • You are illegally trying to shelter income from taxes by hiding money in offshore or other accounts that are not subject to the IRS rules for taxation
  • You are buying or selling goods, assets, or services far below market value to shelter the gains income you make
  • You are otherwise hiding income or obtaining income illegally so as not to pay income taxes to the IRS

In any of these cases, your application for a passport may be denied because the IRS cannot afford to have you leave the country with criminal charges pending against you. 

Avoiding the Problem

Clearly, the solution to such a challenge is to NOT attempt to defraud the IRS in the first place.  Remember to: 

  • Pay your taxes on time, or make arrangements with the IRS if you are having difficulty paying your taxes. 
  • Get the help of a tax professional and/or an attorney to help you clarify miscommunication or other challenges with the IRS. 

Getting Help

By working with such professionals, and making arrangements with the IRS, you will not face criminal charges and face the denial of your passport application. If you already have back taxes owed, then an experienced tax attorney can also help you to negotiate your debt with the IRS to avoid penalties and fees and, in many cases, even settle your tax debt for less than the full amount owed.

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