Another Reason to Get Right with the IRS

By: Bryce Morrison

IN BRIEF

On August 8, 2019, the IRS issued a press release urging taxpayers to resolve their tax debts—a sure sign the IRS is coming after taxpayers. If you’re traveling out of the country and you owe taxes to the IRS, you might find your passport is revoked when you go to board your flight home. The Internal Revenue Service has the power to revoke a taxpayer’s passport for seriously delinquent tax debt.

The Issue

Beginning in 2015, Congress began to allow the IRS to report taxpayers to the State Department based on “seriously delinquent” tax debts. Seriously delinquent is defined as a taxpayer who owes legally enforceable tax debt of more than $52,000, but that level increases each year with inflation. However, the tax debt also includes compound interest and penalties, so it can build up fast. When the State Department receives this report, it must deny a taxpayer’s passport application and may revoke their passport.

Some debt collected by the IRS is not included, such as foreign bank account reporting penalties and child support. In addition, taxpayers who are in bankruptcy, who are in a federally declared disaster area, or who have entered into a payment agreement with the IRS are not included.

Before the IRS reports a taxpayer to the State Department, the IRS sends the taxpayer a notice. This notice explains what the IRS intends to do, such as in this scenario, revoke a passport. It is worthy to note that it doesn’t matter if the taxpayer actually receives the notice. If the taxpayer doesn’t resolve their debts with the IRS within 30 days of the notice, the IRS may request that the State Department revoke a passport.

What You Can Do

It takes time to clear up a tax debt with the IRS, and taxpayers should act quickly to make appropriate arrangements. Even when everything is settled, it still takes time for the IRS to notify the State Department and for the State Department to reinstate a passport. Every taxpayer with seriously delinquent tax debt should seek advice from a tax professional. Bernstein Shur tax professionals have experience dealing with the IRS regularly. If you are navigating tax issues and the accompanying bureaucracy, seek counsel to assist you to resolve them.

Learn more about our Tax Group or contact us with questions.