Can You Get a US Passport if You Owe Back Taxes?

Person processing a stack of new US Passports
Passport Rules Relaxed In Advance Of Summer Travel Season. Joe Raedle / Getty Images

You can get a passport in the United States even if you have unpaid federal taxes, believe it or not. The Department of State is not authorized to deny your right to get a passport based on whether or not you're settled up with the Internal Revenue Service.

That's good news for travelers looking to get a passport. But it's bad news for the rest of the American taxpaying public, who may begin to lose confidence that everyone else is paying their fair share. Because the truth is, they're not. The IRS is essentially powerless to use passport issuance as leverage to collect billions of dollars in unpaid taxes.

Billions Uncollected From Scofflaws

How many billions of dollars go uncollected from those trying to get a passport?

According to the Government Accountability Office, the independent investigative arm of Congress, about 224,000 of the 16 million people who sought to get a passport in 2008 owed at least $5.8 billion in federal taxes. And the IRS could do nothing about it.

If that's doesn't meet the definition of fecklessness, we don't know what does.

"IRS enforcement of federal tax laws is vital - not only to identify tax offenders - but also to promote broader compliance by giving taxpayers confidence that others are paying their fair share," the GAO wrote in April 2011.

"As federal deficits continue to mount, the federal government has a vital interest in efficiently and effectively collecting the billions of dollars of taxes owed under current law."

Clearly, the taxes not paid by these passport seekers contributes to the nation’s $350 billion a year “tax gap,” the difference between the annual amount of taxes owed and the amount voluntarily paid on time. The tax gap results in higher taxes for all Americans, increases the national federal deficit, and reduces the level and quality of service the federal government can be offer.

Examples of Tax Cheats Getting a Passport

The GAO study found numerous egregious examples of tax cheats who successfully applied to get a passport in 2008. They included a gambler who owed $46.6 million in back taxes, a World Bank employee who owed $300,000 to the IRS, and a State Department contractor who neglected to pay $100,000 to the government.

The GAO's investigation of 25 specific passport applications found 10 people who had been indicted or convicted of federal laws.

"Some of these individuals accumulated substantial wealth and assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes," the report found.

Should Tax Cheats Get a Passport?

There's an easy solution to the problem, according to the GAO: Pass legislation allowing the IRS and State Department to work together to identify tax cheats and deny them their right to get a passport.

"If Congress is interested in pursuing a policy of linking federal tax debt collection to passport issuance, it may consider taking steps to enable State to screen and prevent individuals who owe federal taxes from receiving passports," the GAO concluded.

Screening those trying to get a passport for tax cheats shouldn't be too difficult. The federal government already restricts the issuance of passport to people who, for example, owe more than $2,500 in back child support payments.

"Such legislation could have the potential to help generate substantial collections of known unpaid federal taxes and increase tax compliance for tens of millions of Americans holding passports," the GAO report recommended.