August 2018 JD Supra
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US Passports: Taxpayers Should Act Before IRS Notifies The State Department was published by JD Supra on 8/7/18.

US Taxpayers that come forward to the IRS to arrange payment of their seriously delinquent tax debt before the IRS notifies the US Department of state stand to achieve a better outcome regarding the potential revocation or denial of US passports because of unpaid taxes. 

There are currently over 360,000 US Taxpayers that have been identified by IRS with overdue tax bills that are at risk of losing US passport privileges. 

IRS has been trying to encourage US Taxpayers that are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy.  The Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015, requires the IRS to notify the State Department of US Taxpayers that IRS has certified as owing a seriously delinquent tax debt.  The FAST Act also requires the US State Department to deny the delinquent US Taxpayer’s passport application or deny renewal of their passport and in some cases, revoke their passport.

What is seriously delinquent tax debt? 

•             An “unpaid, legally enforceable federal tax liability of an individual,” which has been assessed;

•             Is greater than $50,000 (adjusted for inflation); and meets either of the following criteria:

  1. A notice of lien has been filed under Internal Revenue Code (IRC) § 6323 and the Collection Due Process (CDP) hearing rights under IRC § 6320have been exhausted or lapsed; or (2) A levy has been made under IRC § 6331.

Taxpayers ought to avoid having the IRS notify the State Department of their seriously delinquent tax debt by

  • 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 of a levy, or
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

US Taxpayers might “NOT KNOW” that they are at risk of losing their passports

US Taxpayers living abroad (approximately 9 Million) might not be aware that they owe money to the IRS due to lack of tax correspondence.  IRS stated that the IRS: “generally does not know if international taxpayers receive the tax correspondence sent to them”. 

Don’t be a victim of your own making

US Taxpayers behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS.  Consult your specialized tax advisor to establish a payment plan with IRS.