The IRS can now revoke the U.S. Passports of delinquent taxpayers. H.R. 22, which adds a new section to the tax code titled "Revocation or Denial of Passport in Case of Certain Tax Delinquencies" has been passed as a ride-along to an unrelated piece of legislation called the Fixing America's Surface Transportation Act (FAST). The new law will go into effect on January 1, 2016.
"This law has the potential to affect many Oklahomans working in the international oil patch. We have already received inquiries from Americans abroad who face revocation of their passports in 2016," says Travis Watkins, Oklahoma tax attorney.
Watkins sees this as yet another powerful weapon for the IRS, like the IRS lien and levy that have been around for years. Taxpayers whose passports are still in jeopardy for seriously delinquent IRS debt need to act quickly to ensure they are not revoked. However, it could be difficult to get a quick answer from the IRS.
With all of the cuts to the IRS budget in recent years, 60% of taxpayer calls to the IRS go unanswered. Many people in this situation increase their chances of obtaining a collection alternative and obtaining it faster by hiring a local, licensed tax lawyer like Travis Watkins who works with the IRS routinely in these situations.
Here are some of the most frequently asked questions and answers regarding the Revocation or Denial of Passport in Case of Certain Tax Delinquencies legislation:
Who Is Affected by This New Legislation?
Anyone the IRS considers "seriously delinquent" on their federal taxes can be affected. In this case, "seriously delinquent" means that you owe a tax debt of $50,000 or more, including penalties and interest.
Are There Specific Ramifications for Oklahomans?
Yes. This law could potentially strand a significant number of Oklahomans working in the international oil patch. We have already received inquiries from Americans abroad who face potential revocation of their passports.
Is This Legal?
The law has yet to face a constitutional challenge and administrative commentary is virtually non-existent at this point. However, this law is modeled after long-standing laws that restrict travel for Americans with delinquent child support debts of $2500 or more.
Are There Any Exceptions to This Law?
Yes. You may apply to the State Department for an administrative exception for emergency or humanitarian reasons. However, administrative delays for such requests seem likely. The law does not apply to taxpayers that are challenging their tax bills in tax court or seeking a collection alternative with the IRS. The most widely used "collection alternatives" are installment agreements (payment plans) of various types and the IRS Offer in Compromise program.
What Should I Do If My Passport Is in Jeopardy?
Pay the debt entirely (or at least below the $50,000 threshold), request an installment agreement or an IRS settlement/offer in compromise. Be aware that the IRS requires the taxpayer to fill out a Collection Information Statement for serious delinquent tax debt. This means that you will have to tell the IRS where you work, where you bank and what assets you have.
Contact Our Experienced Tax Attorneys for Additional Help
Many seriously delinquent taxpayers increase their chances of obtaining a collection alternative by hiring a local, licensed tax lawyer that works with the IRS routinely in these situations. If you have significant outstanding federal tax liability and fear that your passport is in danger of being revoked, call Travis Watkins today for a free consultation. We can help you get into the debt settlement program that's the best fit for your unique situation and help keep your passport safe.