The State Department enacted a new rule regarding tax debt in 2015 but it didn’t become fully implemented and enforced until earlier this year – JUST in time for the 2018 tax season.
As per www.IRS.gov, if an individual has “seriously delinquent tax debt,” the IRS will contact the State Department, who will, in turn, “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.”
“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 one the IRS Notice.
And for the rest of y’all – pay your taxes! 😉
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