In a few months, Oklahomans with seriously delinquent IRS debt may be in for a rude awakening when it comes to their travel plans.
The U.S. State Department is working closely with the IRS to revoke the passports of taxpayers with seriously delinquent tax debt, which is defined as past due federal tax of $50,000 or more, including penalties and interest.
"In early 2016, Congress tasked the IRS with this authority, but the mandate is starting to grow teeth as the State Department begins actual enforcement of this initiative," said Oklahoma tax attorney Travis W. Watkins.
This means that the State Department will not issue or renew the passports of these seriously delinquent taxpayers.
"However, if you are in a formal agreement with the IRS for repayment of your liability, the IRS will not consider it seriously delinquent," he added. "We strongly encourage you to contact a tax attorney if this is your case."
The IRS is required to notify individuals in writing at the time the IRS certifies your account as seriously delinquent to the State Department. The letter will be sent to the person's last known address. After receiving the notice from the State Department, the agency will hold an application for 90 days to allow you to resolve any certification issues and make full payment of debt and/or enter a satisfactory payment alternative with the IRS, Watkins said.
"There are certain solutions that a tax attorney can expeditiously help you with in this situation: an installment agreement or an offer in compromise," Watkins added.
Can you just pay some and go?
"Unfortunately, reducing the amount under $50,000, without paying the debt in full, will not declassify you as seriously delinquent." Watkins warned.
"The IRS will only remove these restrictions if you get into good standing. You will have to set up a payment plan, offer in compromise or a formal dispute of the debt in tax court before you have received a letter from the IRS, you will not be classified as seriously delinquent," he said. "So, get something worked out before these letters issue," Watkins urges.
Travel or work abroad
People who are traveling for business can continue to use their passports until they are notified by the State Department of the levy. If the passport is already canceled or revoked, the taxpayer must resolve the tax issue by paying the debt in full, or by a formal resolution, as mentioned above.
Watkins said getting the IRS to respond to your phone call is very difficult anyway.
"That difficulty is compounded if you are stranded working or traveling overseas, and a local tax attorney can help you settle the bill and work towards an acceptable resolution," he said.
Other potential travel headaches
There may also be other domestic travel and work issues if Oklahoma doesn't get an extension of the Real ID Act, Watkins said.
The REAL ID act was passed by Congress in 2005 in response to 9/11 to help increase national security. Certain standards were set for security reasons pertaining to driver's licenses/ identification cards. If not compliant on the state level, federal agencies will no longer accept the IDs. House Bill 1845 was passed during the 2017 Legislation allowing Oklahoma DPS to be compliant with the REAL ID Act of 2005. Unfortunately, it takes 24-30 months for this to go into effect.
"That means Oklahoma will not be fully compliant until mid-to late 2019," Watkins said. "We will be able to use the Oklahoma license/ID until Oct. 10 when our last extension will expire. Without another extension, a serious delinquent taxpayer with the IRS will not be able to enter federal facilities, air bases or travel abroad."
Watkins strongly encourages Oklahomans to plan ahead if they are in this situation.
Call 405-607-1192 if you are in this situation.