By Pedro Bianco
En esta noticia
When people talk about problems with the Internal Revenue Service, almost everyone thinks of fines and interest. But a tax debt that is not paid off and allowed to grow can escalate into much more serious consequences: from losing your passport to even potentially facing criminal charges.
Owing is not the same as evading
Before getting alarmed, it is worth understanding a distinction that changes everything. Owing money to the IRS is a civil matter: it generates fines, interest, and collection actions, but by itself it does not lead to jail. Jail comes in a different arena, the criminal one, and requires that there have been intentional conduct of fraud or evasion.
Simply put: no one goes to prison for not being able to pay; the criminal risk arises from lying, hiding, or deliberately deceiving the tax authority. With that difference in mind, the two scenarios are easier to understand.
An overdue IRS debt can cost you your passport
This is a civil penalty and, for that very reason, the one most people do not know about. Under section 7345 of the Internal Revenue Code, if a person accumulates what the law calls a “seriously delinquent tax debt”, the IRS can certify that debt to the State Department, which in turn can deny, limit, or revoke the passport.
The threshold that triggers the process is adjusted for inflation every year and is around $66,000 in 2026 (including tax, penalties, and interest). When it is reached, the IRS sends notice CP508C and notifies the State Department.
From there, as a rule a new passport is not issued, a renewal in process may be rejected, or the one already held may be revoked. Someone who is abroad can receive a passport with limited validity only to return to the United States.
Tax evasion can end in prison sentences
Here we move from the civil to the criminal sphere, and that is why the requirement is much higher: there must be intent. Tax evasion, the deliberate attempt to avoid or defeat the payment of tax, is defined in section 7201 of the Internal Revenue Code as a felony.
The penalties are severe: fines of up to $100,000 for individuals (and up to $500,000 for companies), up to 5 years in prison, or both, plus court costs.
This does not apply taxpayers who simply could not pay: it applies to people who hid income, falsified records, kept double books, or deliberately lied. The line separating the civil problem from the criminal one is, precisely, the intent to deceive.