New laws permit the State Department can block a application for a new passport or to renew a passport. The government can even seize an existing passport from a taxpayer who owes more than $50,000 in taxes.
This $50,000 threshold is deceptive, because it includes penalties and interest. Thus, it is entirely possible that a tax liability far under the threshold can exceed it once penalties and interest have been assessed.
The State Department is the agency that takes the action against the passport at the behest of the Internal Revenue Service.
Being proactive regarding your tax liability always a good idea, but now it is a better idea than ever before. The IRS is less likely to refer the matter to the State Department if the taxpayer is engaged with the IRS to resolve the tax liability in some fashion. Therefore, it is in the taxpayer’s best interest hire a professional sooner rather than later.