Do you have upcoming travel plans?
If you owe significant tax debt, you may be in for a surprise. The State Department will revoke your passport, or not issue you a new passport, if you owe a significant tax debt to the IRS. Therefore, taxpayers with tax debts and international travel plans should contact their CPA as soon as possible to resolve their tax debt and protect their passport.
How Much Debt is Too Much?
The IRS will notify the State Department if a taxpayer has a seriously delinquent tax debt. As of January 2022, the amount of tax to be considered seriously delinquent is $55,000 or more. This amount is adjusted annually.
Taxpayers are notified that they are on the list for passport revocation by receipt of IRS Notice CP508C. Once notified, the State Department may then deny or revoke passport applications and renewals and restrict international travel.
This can result in a crisis for anyone planning to travel internationally. This is especially true for those who cross the border with Mexico or Canada every day for work.
If You Owe Debt, Don’t Wait!
When a passport is denied or revoked, the taxpayer should petition the IRS for the action to be reversed. The normal processing time for these petitions is 30 days. However, expedited processing is available under certain circumstances.
Fortunately, the matter can be corrected if the taxpayer is cooperative with the IRS and is able to show a good-faith attempt to resolve their tax debt. If the taxpayer can afford to pay the tax, then the passport will be issued or restored as soon as the debt is cleared.
Can I Get a Passport if I Cannot Afford to Pay the Tax?
If a taxpayer in need of a passport cannot afford to pay their tax, which is often the case on tax bills of $55,000 or more, then one of several tax resolution options should be considered. These options include an Offer in Compromise, an installment agreement or non-collectible status.
The IRS will require that the taxpayer be compliant with the tax laws in order to be eligible for a resolution option. Importantly, all tax returns for the prior six years must be filed with the government before the IRS will even consider any kind of payment arrangement or negotiation of the tax. In addition, the IRS will also require that withholding taxes are paid throughout the year. If a taxpayer is an independent contractor or owns a business, then the IRS will require that taxes are being paid 0n a quarterly basis. Quarterly taxes are due by April 15, June 15, September 15 and January 15 of the following year.
In addition to tax compliance, the IRS has a mass of other requirements that the taxpayer must pass before a resolution option will be finalized and a passport approved. While this is intimidating, it can be done and your right to a passport can be restored. Speak with a CPA with experience in IRS negotiation to navigate the process for you.
Feel free to call our Atlanta office at 678-235-5460 or our Chicago office at 773-828-0551. We will be happy to discuss your situation, including the resolution of your taxes, filing missing tax returns and restoring your right to a passport. We deal with the IRS so you do not have to.
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Massey and Company CPA serves the tax and accounting needs of small businesses and individuals nationwide. With offices in Atlanta and Chicago, the firm handles tax preparation and planning, IRS controversy, tax debts, tax audits, unfiled tax returns, bookkeeping and small business accounting.