Pay up! IRS now sending tax delinquents' names for passport denials

This is actually a good news story, but only if you’re a law-abiding, taxpaying American citizen.

If, however, you’re among more than a third of a million Americans in a tax delinquent category, well, then this is not a good news story.

It seems Congress passed a law three years ago requiring the Internal Revenue Service to cull out Americans who have more than $51,000 in overdue back-tax debts. Then, the IRS sends those names in batches over to the State Department where they file the names to deny those folks new passports or passport renewals

Eventually, they may be cancelling existing valid passports, but not for now, the Wall Street Journal (subscription) reports. Nor does the current enforcement action involve delinquent taxpayers who are up-to-date on installment repayment plans.

If you’re a tax delinquent, you probably wouldn’t appreciate such decisive limits on your movements abroad. On the other hand — and here’s where most of us come in — those of us who do pay our taxes and tax debts on time are carrying the burden of the delinquents.

After six months of this action, the IRS hopes to have the entire delinquent list of some 362,000 names over to State by year’s end. As of the end of June, under this threat 220 people had paid off $11.5 million in tax debts to stay off the list and 1,400 others had signed installment payment agreements.

The Department of Health and Human Services already has a similar plan in place against anyone who is more than $2,500 behind in child-support payments.

Right now, IRS mails its warning letter to the taxpayer at the same time as it sends the delinquent’s name to the passport folks.

Tax advocates are hoping to tweak that so the IRS letter provides a 30-day window to pay up before State starts its own delinquent actions. On another other hand, by definition being delinquent, they’ve already had considerable time to settle that obligation.