A law passed by Congress and signed by President Obama known as the FAST Act is largely about various land transportation matters. However, the law also includes a section that international travelers should become well-acquainted with. The law ultimately allows or even requires the State Department to deny, revoke, or limit passports issued to "seriously delinquent taxpayers" after the IRS notifies the State Department.
Here's how the process works. First, the taxpayer is considered seriously deliquent when both of the following are true:
- The taxpayer owes the IRS at least $50,000 (taxes, interest, and penalties all count towards this total), and
- A notice of lien has been filed by the IRS and all rights to an appeal have expired or been ehausted, or a notice of a levy has been filed by the IRS
If both of these are true, then the IRS is required to notify the State Department that the taxpayer is seriously delinquent and to notify the taxpayer that the State Department has been notified.
Once the State Department has been notified by the IRS of the taxpayer's being seriously delinquent, the State Department's flexibility in response depends on the exact nature of the taxpayer's passport:
- If the taxpayer applies for a passport or passport renewal, the State Department must deny the application.
- If the taxpayer already has an active passport, the State Department may revoke it.
- If the taxpayer is outside of the United States when the certification is issued, the State Department must limit (or issue a limited passport, if needed) that only allows travel back to the United States.
Once a taxpayer has been certified as seriously delinquent to the State Department, the only ways to get the restrictions lifted are as follows:
- The debt must be fully paid, or
- The debt must no longer be legally enforceable, or
- The taxpayer must enter into, and the IRS must agree to, a formal installment agreement or an offer in compromise, or
- The taxpayer must request innocent spouse relief
That said, given the severity of the restrictions, it's important to keep in mind how to avoid certification as a seriously delinquent taxpayer in the first place:
- The simplest option, obviously, is for the taxpayer to simply stay current with all tax obligations.
- If that isn't an option, the taxpayer should pay enough to keep the balance due below $50,000.
- If that isn't an option, the taxpayer should apply for, and have the IRS accept, an installment agreement or an offer in compromise as soon as possible - the IRS's acceptance timeline for these applications once submitted, particularly ones involving large amounts of tax due., can be longer than a year
- Finally, the taxpayer can request innocent spouse relief or a collection due process hearing.
Above all, though, if you are certified as a seriously delinquent taxpayer, are at risk of being certified as one, or are working towards having the certification withdrawn, you should contact an Atlanta tax accountant to assist you with the process.
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