Let's say a person is planning to take a plane trip out of the country. And further suppose that individual owes the federal government a fair amount of back taxes. The person may not be able get a passport if he or she owes the government a significant amount of back taxes. The IRS is now reminding taxpayers that legislation passed in 2015 allows the tax agency to revoke passports or deny new ones to major debtors.
Under the Fixing America's Surface Transportation Act of 2015, a highway spending measure, the IRS was granted the authority to notify the State Department about taxpayers who have "seriously delinquent tax debts." The State Department is then tasked with denying the individual their passport application or renewal. It took awhile to put the wheels in motion, but the IRS began enforcing this provision of the law last year.
For these purposes, a seriously delinquent tax debt is defined as $59,000 (2022) or more, indexed for inflation. This includes back taxes, penalties and interest for which the IRS has filed a tax lien or issued a levy.
If a taxpayer is certified as owing a seriously delinquent tax debt, he or she receives a Notice CP508C from the IRS. This notice explains the steps that must be taken to resolve the debt. For instance, IRS representatives may help a taxpayer set up a payment plan or explain other payment alternatives. People who owe back taxes shouldn't delay — especially if they're planning a trip abroad.
Once the tax obligations are met, the IRS will reverse the taxpayer's certification within 30 days. Matters may be expedited under certain circumstances.
Before denying a passport renewal or new passport application, the State Department will hold a taxpayer's application for 90 days to allow him or her to resolve any erroneous certification issues, make full payment of the tax debt or enter into a satisfactory payment arrangement with the IRS.
In an IRS announcement, the agency presents several ways that an individual can avoid having the State Department notified of a seriously delinquent tax debt, including the following:
The IRS also has provided details on two key relief programs available to taxpayers who could have their passports revoked or denied.
Other special rules apply to taxpayers who are currently serving in a combat zone.
Moral of the story: As you can see, there are several available options for avoiding a worst-case scenario. With assistance from a tax advisor, a person who owes back taxes should be able to find a happy tax landing.
The IRS says it won't certify a taxpayer as owing a seriously delinquent tax debt or will reverse the certification for an individual who:
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