Can the IRS Suspend My Driver’s License?

Maybe you forgot to file your tax return this year or haven’t filed in decades and owe tens of thousands to the IRS. In addition to fears about fines and penalties, you’re worried the IRS will take away your driver’s license. It’s smart to worry because you’ll have a tough time making it to work without that license.

Can the IRS suspend your driver’s license? Find the answer below. You’ll also learn how to prevent revocation and recover your license if a state agency takes it away.

Can the IRS Take Your Driver’s License?

First, the good news: The IRS cannot take away your driver’s license. However, it can take away any professional license you hold, but this usually only happens as a last resort if you continually refuse to pay what you owe.

Individual states can revoke your license if you don’t pay taxes. In many states, the threshold for suspension is quite high. California, for example, won’t take your license unless you owe more than $100,000.

Some states have rather low thresholds for suspension. Maryland is one of these states. It can suspend licenses or deny renewal regardless of how little a resident owes.

How Licensing Revocation Works

Can the IRS suspend your driver’s license? No, but depending on where you live, your state might be able to do so. The state won’t take your license overnight for unpaid taxes, though. Here’s how the process generally works:

1. You reach the state’s revocation threshold. In some states, the system automatically sends an alert when taxpayers reach the threshold. In others, state employees must perform a manual review to discover taxpayers who’ve hit the threshold.
2. The state revenue department sends you a notice of delinquent taxes and the possibility of license suspension. You’ll usually have 20 or 30 days (varies by state) to pay what you owe.
3. If you don’t pay what you owe by the deadline, the revenue department will send your information to the local DMV for license suspension or revocation.
4. The DMV will suspend or revoke your license and send you a letter notifying you of this fact.

Preventing License Revocation

If you’re about to lose your license, don’t give up hope yet. You have a few options for preventing the revocation of your driver’s license.

One option is to set up an installment agreement with the appropriate revenue department. Doing this allows you to keep your license as long as you make the agreed-upon payments at regular intervals.

The other option is called an offer in compromise. With an offer in compromise, you must prove that you have no way to pay what you owe. You usually must be low-income or have very limited assets to apply for an offer in compromise.

How To Recover Your License

If the state has taken your license over a tax lien, it’s possible to recover it. Here’s how:

1. Hire a tax relief firm and give it power of attorney, which allows the firm to discuss your tax situation with the state.
2. The tax relief firm will attempt to negotiate a deal with the state revenue department. Many states will release your license if you pay something toward your tax bill, even if it’s just $100.
3. Contact your state’s licensing agency to recover your license. You’ll have to pay a small fee for reinstatement (varies by state).

Lost Your License Over an Unpaid Tax Liability? Call Us

Can the IRS suspend your driver’s license? No, but your state can do so if you have unpaid state taxes. If you’ve lost your license, Levy & Associates can help you recover it. Call us at (800) TAX-LEVY for a consultation now.