American taxpayers now have another “incentive” to pay off their tax debt. In addition to its power to levy bank accounts and accounts receivables, garnish wages and file liens on properties, the Government can take away passports from delinquent taxpayers. The United States (“US”) Government recently signed into law the Fixing America’s Surface Transportation Act (“FAST Act”), which allows the Secretary of State to deny, limit or revoke US passports of individuals with “seriously delinquent” tax liability. The new law affects taxpayers that owe more than $50,000 to the Internal Revenue Service (“IRS”) and have not tried to settle the debt or make payment arrangements.
A strict procedure must be observed before the Government can seek enforcement under the FAST Act. The law states that the Service must have tried to collect the tax due, and the taxpayer’s administrative and judicial rights have either lapsed or been exhausted. As such, before the government may recommend denial, revocation or limitation of an individual’s passport the IRS must have made a levy or filed a lien against the taxpayer, and the individual did not attempt to pay the balance owed or tried to set up a payment arrangement.
The Government’s goal is to force delinquent taxpayers to pay their back taxes in full or to make monthly payments towards their liability. Those who have entered into a payment agreement with the IRS are not at risk of a passport recommendation even if more than $50,000 is owed. The same is true for taxpayers who are considered non-collectible or have taken steps to resolve their liability through administrative avenues, such as requesting a Collection Due Process Hearing or filing for Innocent Spouse Relief. Additionally, if the taxpayer makes efforts to become compliant or seek relief after his passport has been denied, revoked or limited, that individual is no longer considered “seriously delinquent” and the government must reinstate the passport. If you are abroad when your passport is revoked and is seeking to return to the US, you can request a provisory passport for direct return.
Do not wait until the IRS knocks at your door to act. If you have unfiled tax returns or unpaid taxes, contact us today and we will help you become compliant!
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