A provision tucked into a Federal highway bill targets serious tax delinquents by either denying or revoking their U.S. passports.
Specifically, the State Department, at the request of the IRS, may deny, revoke or limit the use of a U.S. passport if the holder owes more than $50,000 in taxes, and a lien or levy against the taxpayer is filed. The bill also links the threshold to inflation, so it will grow each year.
For anyone with overdue taxes intending to travel out of the country, now is the time to start paying.
A New Understanding
The fact that the government has granted power to revoke passports suggests that the collection of the country’s growing unpaid tax debt amount is very much becoming a priority.
In 2014, the IRS reported that there were over 12.4 million delinquent accounts in existence; and, with taxes, interest and penalties, the debt owed amounted to nearly $131 billion in assessed taxes.
The bill, named the FAST Act, goes beyond just granting the IRS the chance to collect unpaid taxes. The act also seeks to give private debt collectors a chance to force taxpayers into actually paying their debts.
A mandate requires the IRS relinquish a portion of ‘inactive’ delinquent taxes to private debt collectors is in the act. If the IRS can not collect for more than a year, the account can be go to private debt collectors.
More Than Just Passports
The authority extends beyond revoking passports and includes denying applications and limiting the use of passports.
Taxpayers will be able to get a passport for humanitarian reasons or an emergency.
If an American happens to be out of the country, they can return home. Any taxpayers who is subject to to this new law will receive written notice prior to the revocation of their passports.
Taxpayers who have already entered into agreements to pay will not be affected by the new provisions. Persons who are seeking innocent-spouse relief or claiming hearings will also not be affected.
Analysts are expecting the passport-revocation rule to bring in about $400 million over the next 10 years. The IRS has stated that they are reviewing the new provisions and working to implement the act as soon as possible.
If you have any questions, please feel free to contact JV LAW GROUP today at 714-752-3270 or send us an email info@jvlawgroup.com.
