In 2015, the State Department enacted a new rule regarding tax debt. It didn’t go into effect until 2018, but ever since, as per www.IRS.gov, if an individual has “seriously delinquent tax debt,” they (the IRS) can and will contact the State Department. They, in turn, will “generally deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual.”
Here’s the important part of that law:
Revocation, Limitation, or Denial of Passport in Case of Certain Tax Delinquencies
This notice provides taxpayers with information about the implementation of new section 7345 of the Internal Revenue Code (Code), enacted by Section 32101 of Fixing America’s Surface Transportation (FAST) Act, Pub. L.114–94, on December 4, 2015. Section 32101(a) of the FAST Act added new Code section 7345, which requires the Department of the Treasury (Treasury) to notify the Department of State (State Department) if a certification is made that an individual has a “seriously delinquent tax debt.” Such certification or a reversal of such certification may only be made by the Commissioner of Internal Revenue, the Deputy Commissioner for Services and Enforcement of the Internal Revenue Service (IRS), or the Commissioner of an operating division of the IRS (collectively, Commissioner or specified delegate). Upon receipt of a section 7345 certification, section 32101(e) of the FAST Act provides that the State Department will generally deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual. The IRS and State Department will begin implementation of these provisions in January of 2018.
“Seriously delinquent tax debts” are considered more than $50,000. However that $50,000 includes penalties and interest, so even if your tax debt is significantly smaller, say, $20,000, it could be $50,000 or more once you include the penalties and interest.
There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include:
- Paying the tax debt in full,
- Paying the tax debt timely under an approved installment agreement,
- Paying the tax debt timely under an accepted offer in compromise,
- Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
- Having requested or have a pending collection due process appeal with a levy, or
- Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.
Also, a passport won’t be at risk under this program for any taxpayer:
- Who is in bankruptcy
- Who is identified by the IRS as a victim of tax-related identity theft
- Whose account the IRS has determined is currently not collectible due to hardship
- Who is located within a federally declared disaster area
- Who has a request pending with the IRS for an installment agreement
- Who has a pending offer in compromise with the IRS
- Who has an IRS accepted adjustment that will satisfy the debt in full
If you have a legitimate “seriously delinquent tax debts,” it shouldn’t come as any surprise – the IRS would have sent you numerous notifications of same. But if you are in that category, best to go do what needs to be done to get rid of that debt, or you could potentially lose your passport. Your first step would be to contact the phone number listed on the IRS Notice.
And for the rest of y’all – pay your taxes! 😉
Feature Photo (cropped): Marco Verch Professional Photographer / photo / license
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