If you owe the I.R.S., your passport could be cancelled, revoked or not issued. In simple words, the Government Accountability Office was looking at the issuance of passports to collect taxes, and they succeeded, as the passport provision is official. The I.R.S. will now have something to say about whether your passport is usable. This gets further complicated because some states have skipped the stricter standards for state-issued IDs, and TSA could insist on passports, rather than driver’s licenses, to board flights, including domestic flights. Most people think that you only need a passport to fly internationally, but this can change in 2016 for the residents of the states that do not meet the TSA standards.
IRS debt could lead to passport revocation. (ILLUSTRATION: money.cnn.com)
The bottom line here is that you can’t owe the I.R.S., or be in delinquent status with the I.R.S. because the I.R.S. will have the final say on whether your passport is valid. According to a Forbes article, H.R. 22, a highway funding bill, has been approved, and signed into law by President Obama on 12/4/15, adding a new section to the tax code – Section 7345. The title of the section is “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.”
To make matters worse, a provision was added that authorizes the U.S. State Department to cancel, revoke or not to issue a passport, if the SSN (Social Security number) of the person is invalid, incorrect or does not exist. This means that Immigration now has the power to confiscate U.S.A. passports upon presentation, if the Social Security number is not valid, is incorrect or does not exist.
Does it sound serious? It is.
Here are the facts related to the tax delinquencies as stated in the article:
- The State Department will start blocking Americans with “seriously delinquent” tax debts.
- This means no new passports and no renewals, and a possibility that the State Department will rescind existing passports of people who fall into that category.
- The I.R.S. will compile a list of affected taxpayers.
- The I.R.S. will use a threshold of $50,000.00 of unpaid I.R.S. debt, including penalties and interest. These add up very fast, so $50,000.00 is not a big number, and an easy one to accumulate or round up.
- You could have your passport revoked merely because more than $50,000.00 is owed, and the I.R.S. has filed a notice of lien.
- Remember that the I.R.S. files tax liens routinely. This is a way of putting creditors on notice, so that the I.R.S. eventually gets paid.
- The I.R.S. files the notice of a federal tax lien after it has assessed the liability, sent a notice and demand for payment, and payment is not made within 10 days.
- The I.R.S. tax liens cover all your property, even acquired after the lien is filed.
- You would still be able to travel if you have an I.R.S. acceptable payment plan and you are making your payments, or if the State Department issues a passport in an emergency, or for humanitarian reasons.
It is unclear how many Americans abroad are affected by this new law. What we do know is that the I.R.S. sent 855,000 notices to U.S. citizens abroad in 2014 according to the General Inspector for the Treasury Administration. Usually people facing a bill from the I.R.S. of this magnitude tend to feel overwhelmed and procrastinate.
Don’t be a victim of your own making. Don’t let the State Department and I.R.S block your freedom to travel. Americans traveling abroad, or living abroad, need to pay attention to I.R.S. notices. Moreover, if you are out of compliance, you need to consult your tax advisor immediately.
By Stanley Foodman CPA
Foodman CPAs and Advisors
* 1201 Brickell Avenue * Suite 610 * Miami, Florida 33131
Tel 305 365 1111 * Fax 305 365 2244 *www.foodmanpa.com*
Stanley I. Foodman is CEO of Foodman CPAs & Advisors in Miami, Florida and a recognized forensic accountant and litigation support practitioner. Specializing in complex domestic and international tax matters, he has served as an expert witness and forensic accountant for some of the nation’s most challenging, high-profile economic crime cases. He and his team of accountants also assist clients with a full range of accounting matters including compliance, voluntary disclosure, corporate and individual taxation, family law litigation, estate and trust tax and wealth planning. Consistently ranked as one of the top accounting firms in South Florida, Foodman CPAs & Advisors assists clients locally, nationally and internationally.
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