If you’re planning on taking an international trip anytime soon, you may want to make certain your taxes are paid in full – or that you have entered into a payment agreement with the Internal Revenue Service for any back taxes owed. If not, your passport could be at risk.
That’s the message the IRS delivered in January when it announced implementation of new procedures affecting individuals with “seriously delinquent tax debts.” According to an IRS press release, the new enforcement policy impacts primarily those owing $51,000 or more in unpaid back taxes for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired – or the IRS has issued a levy.
“This enforcement action has been in the works for a number of years and is the result of legislation passed in 2015 that requires the IRS to notify the State Department of taxpayers owing a seriously delinquent tax debt,” said Brian Biffle, president of 20/20 Tax Resolution. “However, many taxpayers impacted by this legislation may not be aware of it or may not understand the serious implications of it.”
Failure to pay unpaid taxes or create a payment plan could lead to denial of a passport application or even denial to renew a passport, according to the IRS. In some extreme cases, the FAST Act – which was signed into law under the Obama Administration in December 2015 – requires the State Department to revoke a passport for unpaid taxes.
“This is very serious for those who travel internationally, especially for a person whose business depends upon international travel,” Biffle said. “To be absolutely certain you are safeguarded from these enforcement actions, taxpayers that owe unpaid taxes should be certain to come forward and deal with any debt they might owe.”
This same legislation, known as the “FAST Act” (for “Fixing America’s Surface Transportation” Act), details the ways travelers can avoid the new passport constraints:
- Pay any unpaid tax debt in full
- Pay the tax debt under an approved installment agreement
- Pay the tax debt under an accepted offer in compromise
- Pay the tax debt 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
- Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief
According to the IRS press release on the matter, the following taxpayers won’t be at risk of this new enforcement program:
- Any taxpayer who is in bankruptcy
- Any taxpayer identified by the IRS as a victim of tax-related identity theft
- Any taxpayer whose account the IRS has determined is currently not collectible due to hardship
- Any taxpayer located within a federally declared disaster area
- Any taxpayer who has a request pending with the IRS for an installment agreement
- Any taxpayer who has a pending offer in compromise with the IRS
- Any taxpayer who has an IRS accepted adjustment that will satisfy the debt in full
To review the full IRS press release, visit the IRS website.