Tax season is a critical time for U.S. taxpayers, and falling behind or making mistakes can have serious consequences—including the possibility that the IRS could revoke your passport. Understanding how tax debts work and knowing your options can help you avoid such severe penalties.
What is the IRS and Which Taxes Does It Handle?
The Internal Revenue Service (IRS) is the federal agency responsible for collecting taxes and enforcing tax laws in the U.S. Key types of taxes managed by the IRS include:
- Income tax: Paid on money earned by individuals and businesses to fund public services like schools and healthcare.
- Inheritance tax: Applied to assets inherited after someone’s death.
- Gift tax: Applies when you give valuable items (money, property) exceeding $17,000 per person in 2024 without receiving anything in return.
- Excise taxes: Charged on specific products such as alcohol, tobacco, gasoline, and luxury or polluting items.
Tax Season: What You Need to Do
Every year between January and April, American taxpayers must report their income and pay any taxes owed. If you’ve overpaid during the year, you may receive a refund. For those new to filing taxes, the IRS website offers tools to estimate your tax obligations and contact options for help: IRS Website.
How to Pay Your Taxes
- Employees: Your employer typically withholds taxes from your paycheck and pays them on your behalf.
- Freelancers and self-employed: You must calculate and pay your taxes directly, often including self-employment taxes.
Consequences of Unpaid Tax Debts
If you ignore or fail to pay taxes owed, the IRS may label your debt as “serious” or “grave” once it crosses a certain threshold. Consequences for grave tax debts include:
- Possible revocation or denial of your U.S. passport if you travel internationally.
- Federal foreclosure notices to seize assets legally to recover owed taxes.
Not All Debts Are Treated the Same
Some tax debts do not trigger severe penalties like passport seizure, especially if:
- You have an active payment agreement with the IRS and are current on monthly payments.
- You’re applying for Innocent Spouse Relief, meaning you weren’t aware of mistakes on your spouse’s tax returns.
Take Action to Avoid Trouble
Dealing with taxes can feel overwhelming, but staying informed and proactive is key. The IRS offers various payment plans and assistance programs to help taxpayers manage debts. If you struggle with tax paperwork or payment, consider consulting a tax professional. Ignoring the issue can lead to serious legal and financial troubles.
Information sourced from:
- IRS official resources: https://www.irs.gov/
- U.S. tax law summaries and IRS announcements
