On January 1, 2018, the IRS started implementing a new law that affects taxpayers’ passports: Section 7345 of the Internal Revenue Code allows the State Department to withdraw or refuse to issue a passport for individuals with seriously delinquent taxes. If you’re behind on your payments, here’s what you need to know.
Seriously Delinquent Tax Debt
The IRS considers your tax debt as seriously delinquent if it meets the following criteria:
- You owe more than $50,000, after adjusting for annual inflation. This amount includes not just your underpayment but any associated penalties and interest.
- The IRS has already issued a tax levy or notice of lien.
- You have already exceeded the time limit for due process hearings or other remedies.
A small debt can quickly exceed $50,000 when the IRS adds penalties and fees.
If the IRS sends a tax debt certification to the State Department to revoke or deny your passport, the IRS will also send a written notice to your last known address.
If you apply for a passport after the State Department receives that certification, they will keep your application on file for 90 days to give you time to either pay your debt or work out an agreement with the IRS.
For those who need their passport to remain employed, they must make payment arrangements to have the certification reversed.
Special Circumstances
The IRS and State may, however, grant some relief under particular circumstances, such as:
- If your tax debt belongs to your spouse, you may be able to file for innocent spouse relief.
- If you have planned international travel and have a current passport, it will only be good until the State Department revokes it.
- If you are serving in a combat zone when the IRS determines your tax debt is seriously delinquent, certification can be postponed.
What You Can Do
The best way to protect yourself is to make debt payments on time. Even if you owe a significant amount, the IRS won’t declare you “seriously delinquent” if you honor the terms of your agreement.
If you do receive notice of a potential debt, always respond before the deadline. On the other hand, if you receive notice your tax debt is seriously delinquent and you have already paid your debt, the notice contains contact information for sending proof to refute the certification.
If you have delinquent tax debt, and are concerned about how this may affect your life, Highland Tax Group can help: Contact us to receive expert advice today.