Previously, we informed you of a 2015 law that allowed the IRS to deny passports to those who have massive federal tax debt, or amounts higher than $50,000. (For a recap, you can read our articles here and here). Basically, this law, known as Public Law No: 114-94 (also known as Fixing America’s Surface Transportation Act or Fast Act) included a rider that allows the denial or revocation of passports due to excessive tax debt. Although this bill passed back in 2015, the IRS is just now warning taxpayers that they will start implementing this law with Notice 2018-01.
In order to see your passport denied or revoked, you must owe more than $50,000. This amount includes your original tax liability as well as any penalty fees and interest. However, you do have time to pay your taxes before you risk losing your right to travel internationally. You must already have a notice of federal tax lien, any administrative remedies have already ended, and/or you have a levy.
You are safe from this action if you:
- Filed for bankruptcy
- Live in a federally declared disaster zone
- Are under Currently Not Collectible Status
- Are an IRS-confirmed victim of tax-related ID theft
- Are past the end of your Statute of Limitations
If you are actively serving in a combat zone and have an extensive tax debt, then you have extra time. The IRS will postpone alerting the State Department so that your passport remains valid.
How to Avoid Losing Your Passport
The simplest way to avoid losing your passport privileges is to pay your tax debt before it heads into collective action. However, for some people, paying your tax bill is difficult. Thankfully, you can avoid it by negotiating a tax relief settlement with the IRS. This might include an:
- Installment Agreement
- Offer in Compromise
- Penalty Abatement
- Innocent Spouse Relief
When you apply and get approved for one of these IRS programs, then you no longer have to worry about facing collective action, including the denial or revocation of your passport.
What Happens if You Receive Notice of a Denial
If you already have a levy on your account and have not taken action to remove it, you have one more plan of action. Upon applying to the State Department for your passport, you have 90 days to resolve your tax debt before your request for a passport is denied. If you are on a tight schedule for your trip, then you will want to talk directly with the IRS. You must resolve the manner within 45 days from the date of your initial passport application, and then the IRS must contact the State Department, which might take some time. You can also appeal the decision or file a civil action in court if you feel that you receive the denial in error.
Now that the IRS has alerted taxpayers about the implementation of this protocol, you face the possibility of having your new or existing passport denied or revoked if you do not handle your tax debt. Don’t continue to wait and see your international trip no longer achievable — or find yourself stranded abroad when your passport gets revoked. Instead, handle your tax bill. This does not have to mean you pay it in full; you can set up an Installment Agreement or apply for another tax relief program for which you qualify depending on your circumstances.
You do not have to deal with this on your own. Rather than talk to the IRS and feel overwhelmed by the paperwork you have to fill out, work with one of our expert tax professionals at Fidelity Tax Relief. We work on your behalf to handle your tax debt and organize a tax relief settlement that fits with your situation. Call us today at 877-372-2520 to get started.