Do you owe a significant amount of taxes to the IRS? Have you not found time to call and set up an agreement to pay the amount owed? Do you enjoy traveling outside of the United States? If you answered yes to these questions, your passport may be at risk. Here is a list of seven things you should be aware of if you owe the federal government.
1. The Fixing America’s Surface Transportation Act (FAST) allows the IRS to revoke your passport.
Congress passed this law to help provide guaranteed long-term funding for surface transportation infrastructure planning and investment. However, there is a provision in the law (Section 32101) which allows the IRS to transmit certification of seriously delinquent tax debt to the Secretary of State for denial, revocation, or limitation of a passport.
2. Know what serious tax debt is.
To be considered a seriously delinquent taxpayer, the amount you owe must be an assessed amount greater than $50,000 (adjusted for inflation), a notice of lien must have been filed and all rights exhausted or lapsed (26 U.S. Code § 6320), and/or a levy was issued pursuant to (26 U.S. Code § 6331)
3. The IRS will send you notice before sending notification to the Secretary of State.
IRS Notice CP508C will be issued to you prior to actions being taken against your passport. Once you receive this, it is in your best interest to contact the IRS and make arrangements to resolve your debt. Once the state receives its notice, your passport is suspended immediately. If you are already out of the country when this action is taken, you will be allowed to travel back home.
4. How to get your passport back after revocation.
Either you can full pay the balance owed, or move forward with any of the following actions:
- File for innocent spouse relief within 30 days from the date of the notice of balance owed. This action is only for those who believe the balance owed is not yours and you should have relief from the entire liability
- Negotiate an Installment Agreement to satisfy the liability based on your current financial condition. Often times, this can be done by providing minimal financial information to substantiate your request as long as the tax is paid within a period of 72 months.
- Negotiate an Offer In Compromise to settle the tax debt owed. The Offer must be completely accepted by the Internal Revenue Service before the release on the passport is granted.
- Show that the certification is erroneous and that the IRS had made a mistake. Note that you cannot sue the state for taking your passport by mistake. In each of the above examples, the IRS will release with the Secretary of State no later than 30 days after each agreement is made. Releases are sent via Notice CP 508R.
5. When you are safe from passport revocation.
You are safe from passport suspension if you have not received notice, and:
- Your balances are less than $50,000
- Your tax balances are already being paid pursuant to a structured Installment Agreement (26 U.S. Code § 6159)
- Your tax balances are already being paid through an accepted Offer In Compromise (26 U.S. Code § 7122)
- Your tax debts are already suspended due to a pending Collection Due Process Hearing (26 U.S. Code § 6330)
- Your tax debts are currently being reviewed under the IRS Innocent Spouse guidelines (26 U.S. Code § 6015)
Call Timberline Tax Group at 844-345-3250 for a free consultation.