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Traveling abroad is a privilege that many individuals take for granted. However, for taxpayers with significant unresolved tax debt, this privilege can be curtailed due to potential passport revocation by the Internal Revenue Service (IRS). In 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act, giving the IRS the authority to coordinate with the State Department in denying, revoking, or limiting passports for taxpayers with a seriously delinquent tax debt. This development added a new layer of complexity to the challenges faced by taxpayers, making it crucial to understand the link between tax debt and passport privileges.
In this comprehensive blog article, we will help you navigate the intricacies of IRS passport revocation, including the circumstances under which the IRS may take such action, available strategies for retaining passport privileges, and the invaluable role that experienced tax attorneys play in helping taxpayers resolve their tax debt challenges successfully. Our goal is to equip you with the necessary knowledge and insights so that you can understand the potential risks associated with unresolved tax debt and make informed decisions in addressing your financial obligations and protecting your passport privileges.
Understanding IRS Passport Revocation under the FAST Act
The Fixing America’s Surface Transportation (FAST) Act of 2015 contains Section 7345, “Revocation or Denial of Passport in Case of Certain Tax Delinquencies”. This provision empowers the IRS to certify taxpayers with seriously delinquent tax debt, defined as an outstanding tax liability exceeding $50,000, adjusted annually for inflation. When the IRS certifies a taxpayer as seriously delinquent, they notify the State Department, which can result in the following passport actions:
- Denial of Passport Application or Renewal: For taxpayers applying for a new passport or seeking to renew an existing one, the State Department can deny the application based on the taxpayer’s seriously delinquent tax status.
- Revocation of Current Passport: The State Department has the authority to revoke an existing passport for certified taxpayers with seriously delinquent tax debt.
- Limited Validity Passport: In some cases, the State Department may issue a limited validity passport, which only permits travel to and from the United States, but does not allow for international travel.
It is important to note that taxpayers under an installment agreement, proposed Offer in Compromise, or identified as victims of tax-related identity theft are generally exempt from passport revocation actions.
Delinquency Notice and Options for Resolving Tax Debt
Before the IRS certifies taxpayers as seriously delinquent, they must provide a Notice of Federal Tax Lien and a Notice of Intent to Levy. These notices give taxpayers a 30-day window to request a Collection Due Process hearing or engage in one of the following debt resolution strategies to address their tax liabilities and protect their passport privileges:
- Enter into an Installment Agreement: Negotiating a payment plan with the IRS allows you to make monthly payments towards your tax debt, providing you with a more manageable path towards clearing your tax liabilities and safeguarding your passport.
- Submit an Offer in Compromise: If you can prove that your financial circumstances make it impossible to repay the full amount of your tax debt, you may be eligible for an Offer in Compromise, wherein the IRS agrees to accept a lesser amount to resolve your debt, reducing the risk of passport revocation.
- Apply for Currently Not Collectible Status: In cases of extreme financial hardship, you can apply for Currently Not Collectible (CNC) status, temporarily halting IRS collection actions, including passport revocation.
The Benefits of Consulting Experienced Tax Attorneys
Partnering with skilled tax attorneys who specialize in resolving tax debt issues can provide you with invaluable guidance and support throughout the process of addressing unresolved tax debt and protecting your passport privileges. Some benefits of obtaining professional legal assistance include:
- Expertise: Experienced tax attorneys possess comprehensive knowledge of tax laws and regulations, enabling them to provide well-informed advice on safeguarding your passport via resolving tax debt.
- Negotiation Skills: Tax attorneys are adept in negotiating with the IRS on your behalf, ensuring that you receive the best possible resolution outcome to address your tax liabilities.
- Tailored Resolution Strategies: By assessing your unique financial circumstances, tax attorneys can help you develop personalized strategies to effectively address your tax debts and secure your passport privileges.
- Ongoing Support: Tax attorneys can provide ongoing support to help you maintain compliance with IRS requirements, empowering you to avoid future tax debt issues and potential passport revocation.
Protecting Your Passport Privileges through a Proactive Approach
Maintaining your passport privileges requires vigilance in monitoring your tax obligations and taking proactive action to resolve tax debt. Consider the following recommendations:
- Stay Informed: Keep abreast of changes in tax laws, regulations, and deadlines to ensure that you remain in compliance with tax requirements, thereby reducing the risk of delinquency and passport revocation.
- Monitor Your Tax Obligations: Regularly review your tax liabilities, taking prompt steps to address any outstanding tax debts before they escalate and jeopardize your passport.
- Consult with Professionals: If you have concerns about your tax obligations or potential passport revocation, consult with experienced tax attorneys for expert guidance and customized solutions to address your tax debt and safeguard your passport.
The FAST Act’s provision empowering the IRS to revoke or limit passports of taxpayers with seriously delinquent tax debt adds a new dimension to tax debt resolution. By understanding IRS passport revocation actions, implementing effective debt resolution strategies, and enlisting the support of experienced tax attorneys, you can work towards resolving your tax liabilities and preserving your passport privileges. Don’t let tax debt jeopardize your freedom to travel; engage professional legal assistance to resolve your tax issues and protect your passport for future adventures.
Do you have unresolved tax debt and concerns about potential passport revocation? Schedule a free consultation with our expert tax attorneys today, and let us guide you through the process of addressing your tax issues and preserving your passport privileges.