While hiding one’s head in the sand can feel better than actually dealing with the problem of tax debt, it needs to be dealt with sooner rather than later. Especially if a taxpayer has plans to travel, needs to travel for work, or would like to be able to travel internationally at will.
A serious tax debt and delinquency can result in the Internal Revenue Service notifying the State Department who can revoke your right to international travel. Under the Fixing America’s Surface Transportation (FAST) Act, by law, the IRS will notify the State Department (State) of taxpayers who have a tax debt of $52,000 or more. The law then requires the State to deny passport application or renewal. Also, 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.
Fortunately, there are several ways taxpayers can avoid having the IRS notify the 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
- Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief
Also, by getting the taxpayers to acknowledge the problem, they can get busy applying for (and likely qualifying for) one of several relief programs – including a payment agreement. The taxpayer can fill out Form 9465 at IRS.gov and mail it along with their tax return, bill or notice. If approved, the taxpayer can use the Online Payment Agreement system to set up a monthly payment agreement that saves time and money, not to mention one’s travel rights!
Another option is applying for an Offer in Compromise which is 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.
It is important to find a solution rather than hide from tax debt. It won’t go away and there will likely be consequences, some potentially serious. It’s important that taxpayers to resolve their significant tax debt to avoid putting their passports in jeopardy. Anyone with a tax debt should contact the IRS as soon as possible to avoid delays in their travel plans.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.