Get a Grip on your Tax Debt….or Risk Losing your Passport
Failing to pay off yourcould now cost you your passport. Beginning in 2018, the IRS began sending certifications of seriously delinquent tax debt to the State Department. If the IRS certifies your tax debt, the State Department will generally deny your passport application and could also revoke your current passport.
The IRS has been warning taxpayers about passport revocations for years, but has just started to exercise this power. If you have a significant amount of tax debt, your passport could now be at risk.
“Seriously Delinquent” Tax Debt
Tax debt must be over $51,000 to be considered seriously delinquent. In addition, the IRS must have either:
- Filed a notice of Federal Tax Lien and all of the taxpayer’s collection due process rights have either lapsed or been exhausted, or
- Issued a tax levy.
Interest and penalties can be included when determining how much tax debt exists. But some types of debts are not included in this calculation, such as FBAR penalties.
The threshold amount will be indexed for inflation annually and rounded to the nearest multiple of $1,000.
How to Avoid a Passport Revocation
Taxpayers have several different options for avoiding a passport revocation or denial. If you are negotiating with the IRS or contesting the tax debt, there’s a good chance you can avoid a passport revocation.
The IRS has specially stated that the following tax debts will not be considered seriously delinquent:
- Debt that is being paid off with an IRS installment agreement
- Debt that is part of an Offer in Compromise
- Debt for which the taxpayer has requested a collection due process hearing
- If collection has been suspended because the taxpayer has requested innocent spouse relief
Installment agreements or Offers in Compromise that are pending will also prevent a passport revocation. If you are in bankruptcy or have been placed under currently not collectible status due to hardship, your passport will also be safe, at least temporarily.
If you are concerned about losing your passport, do something about it! Doing nothing is by far the worst strategy.
If you are receiving notices about your tax debt from the IRS, contact a tax attorney to discuss your options. You may be able to request a collection due process hearing or negotiate an installment agreement, but you have to follow the proper procedures to make these things happen.
If you take action, you may be able to resolve your tax debt problems and stop the State Department from taking your passport.
Ayar Law provides creative solutions to your tax problems, including Offers in Compromise and audit defense. Call us at 248-262-3400 to schedule a consultation with one of our tax attorneys