Experienced Tax Accountant – The
Internal Revenue Service today urged taxpayers to resolve their significant tax
debts to avoid putting their passports in jeopardy. They should contact the IRS
now to avoid delays in their travel plans later.
Under
the Fixing America’s Surface Transportation (FAST) Act, the IRS notifies the
State Department (State) of taxpayers certified as owing a seriously delinquent
tax debt, which is currently $52,000 or more. The law then requires State to
deny their passport application or renewal. If a taxpayer currently has a valid
passport, State may revoke the passport or limit a taxpayer’s ability to travel
outside the United States.
When
the IRS certifies a taxpayer to State as owing a seriously delinquent tax debt,
the taxpayer receives a Notice CP508C from the IRS. The notice explains what
steps the taxpayer needs to take to resolve the debt. IRS telephone assistors
can help taxpayers resolve the debt. For example, they can help taxpayers set
up a payment plan or make them aware of other payment options. Taxpayers should
not delay because some resolutions take longer than others.
Don’t
Delay!
It’s
especially important for taxpayers with imminent travel plans who have had
their passport applications denied by State to call the IRS promptly. The IRS
can help taxpayers resolve their tax issues and expedite reversal of their
certification to State. When expedited, the IRS can generally shorten the 30
days processing time by 14 to 21 days. For expedited reversal of their
certification, taxpayers will need to inform the IRS that they have travel
scheduled within 45 days or that they live abroad.
For
expedited treatment, taxpayers must provide the following documents to the IRS:
Proof
of travel. This can be a flight itinerary, hotel reservation, cruise ticket, international
car insurance or other document showing location and approximate date of travel
or time-sensitive need for a passport.
Copy
of letter from State denying their passport application or revoking their
passport. State has sole authority to issue, limit, deny or revoke a passport.
The
IRS may ask State to exercise its authority to revoke a taxpayer’s passport.
For example, the IRS may recommend revocation if the IRS had reversed a
taxpayer’s certification because of their promise to pay, and they failed to
pay. The IRS may also ask State to revoke a passport if the taxpayer could use
offshore activities or interests to resolve their debt but chooses not to.
Before
contacting State about revoking a taxpayer’s passport, the IRS will send Letter
6152, Notice of Intent to Request U.S. Department of State Revoke Your
Passport, to the taxpayer to let them know
what the IRS intends to do and give them another opportunity to resolve
their debts . Taxpayers must call the IRS within 30 days from the date of the
letter. Generally, the IRS will not recommend revoking a taxpayer’s passport if
the taxpayer is making a good-faith attempt to resolve their tax debts.
Ways
to Resolve Tax Issues
There
are several ways taxpayers can avoid having the IRS notify State of their
seriously delinquent tax debt. They include the following:
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
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.
Relief
programs for unpaid taxes
Frequently,
taxpayers qualify for one of several relief programs including the following:
Payment
agreement. Taxpayers can ask for a payment plan with the IRS by filing Form
9465. Taxpayers can download this form from IRS.gov and mail it along with a
tax return, bill or notice. Taxpayers who are eligible can use the Online
Payment Agreement system to set up a monthly payment agreement. Using the
Online Payment Agreement system is cheaper and can save time.
Offer
in compromise. Some taxpayers may qualify for an offer in compromise, an
agreement between a taxpayer and the IRS that settles the tax liability for
less than the full amount owed. The IRS looks at the taxpayer’s income and
assets to determine the taxpayer’s ability to pay. Taxpayers can use the Offer
in Compromise Pre-Qualifier tool to help them determine whether they’re
eligible for an offer in compromise.
Subject
to change, the IRS also will not certify a taxpayer as owing a seriously
delinquent tax debt or will reverse the certification for a taxpayer:
Who’s
in bankruptcy,
Who’s
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’s
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, or
Who
has an IRS accepted adjustment that will satisfy the debt in full.
For
taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the
IRS postpones notifying the State Department of the delinquency and the taxpayer’s
passport is not subject to denial during the time of service in a combat zone.
Questions?
Give us a call. We're happy to help! For consultation contact us today!
Amare Berhie, Senior Accountant
(651) 300-4777
