From early 2017, the IRS will be authorised to inform the State Department that citizens have “seriously delinquent tax debt”, the US tax agency advised on its website.
Once confirmation is received, the State Department will have the ability revoke the debtholder’s passport.
People who need their US passport to keep their job must pay the full balance or make an alternative payment arrangement.
No specific date for the implementation of the new policy was given.
For Americans living overseas or out of the country at the time the State Department revokes their passport, the Secretary of State may limit a passport for return travel to the US only or issue a limited passport that only permits return travel to the US.
“This latest move would likely affect American living abroad most acutely,” says deVere chief executive Nigel Green.
“First, because they would typically use their passports more often – not only for travel but for administrative matters, such as rental contracts, in their countries of residence.
“And second, since the worldwide rollout of the highly controversial Foreign Account Tax Compliance Act, (Fatca), in 2014, tax returns have become more complex, onerous and burdensome for US expats due to additional reporting requirements.”
Greens warning comes days after he launched a lobbying and media campaign to repeal Fatca, of which he has been a longstanding critic.
Payment of taxes
The IRS stated: “If you can’t pay the full amount you owe, you can make alternative payment arrangements such as an instalment agreement or an offer in compromise and still keep your US passport.”