Federal Tax Collection: Potential for Using Passport Issuance to Increase Collection of Unpaid Taxes
According to the Internal Revenue Service (IRS), as of the end of fiscal year 2010, the balance of reported unpaid federal taxes was about $330 billion. Given the many challenges that IRS faces, the enforcement of the tax laws and the tax code is on GAO's list of high-risk areas. GAO was asked to (1) determine, to the extent possible, the magnitude of known unpaid federal taxes for individuals who were issued passports in fiscal year 2008; and (2) identify examples of passport recipients who have known unpaid federal taxes. GAO reviewed data from the Department of State (State) and IRS. To identify examples for detailed audit and investigation, GAO chose a nonrepresentative selection of 25 passport recipients based on a number of factors, including amount of taxes owed. These case studies were chosen, among other things, by the more egregious amount of federal taxes owed and cannot be generalized beyond the cases presented.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| If Congress is interested in pursuing the policy strategy of linking federal tax debt collection to passport issuance as an approach to help reduce the federal deficit and to increase taxpayer compliance with tax laws, it may wish to consider taking steps to enable and require the Secretary of State to screen and prevent individuals who owe federal taxes from receiving passports, to include establishing criteria for specific categories of passport holders and waivers as appropriate. To do this, Congress may wish to ask the Secretary of State and Commissioner of Internal Revenue to jointly study policy and practical issues and develop options for further consideration, including developing appropriate criteria and safeguards. | In December 2015, the "FAST" Act, a comprehensive transportation bill, was enacted as law. In response to GAO's March 2011 recommendation, the FAST Act, among other things, (1) enables the Internal Revenue Service to provide information to the Department of State (State) about individuals with "seriously delinquent tax debt," which the act defines as certain types of delinquent debt in an amount greater than $50,000, and (2) requires State to restrict the issuance of passports to individuals with such debt in most cases. By linking federal tax debt collection to passport issuance, Congress has enabled State and the Internal Revenue Service to increase taxpayer compliance with tax laws and to help reduce the federal deficit. |