Congress passed a new law in late 2015 that allows the State Department to deny passports to individuals that owe in excess of $51,000 in federal back taxes. This law, implemented in February, has already resulted in some passports being denied. Roughly 400,000 US citizens are expected to be impacted.
Generally, a taxpayer is subject to this enforcement mechanism if the IRS has a federal tax lien against the taxpayer. The law apparently does not apply if the taxpayer is current with an installment agreement with the IRS. Also, this denial process is only applicable to new passport issuances though renewals are likely to be denied as well.
The IRS is required to notify affected taxpayers as names are supplied to the State Department. But given the inefficiencies and miscommunications we see on a regular basis, I’d expect horror stories and incorrect applications of this law. Bottom line: keep current with your liabilities and let us know if we can assist you with past due taxes.