The Internal Revenue Service (IRS), through its new Notice 2018-01, has published new details concerning tax debts which can impact the travel ability of a particular person. The IRS must notify State Department when the tax debt could be “seriously delinquent”. After this is done, the passport of that individual will not be renewed by the State Department. The latter can even revoke an existing valid passport. This law is not new, being come into force in 2015. However, the law has been started to be applied only now.
In such a sticky situation
The IRS also has stated clear and detailed instructions if a person is found in such a position. For a person who gets a notification that their delinquent tax debts are being sent to State Department, it is imperative for that individual to either pay all taxes in entirety or enter into an installment agreement with IRS. There is also the offer to compromise. It is to be understood that getting such a notification is a serious affair. Applying for a passport at this time will lead to the State Department giving the applicant about 90 days for solving this imbroglio. If travel within that period is compulsory, then the applicant must contact IRS and solve the matter within a span of 45 days after making the application. If this is done, the IRS will have sufficient time to notify State Department.
Consequences and solution
The rules are not restricted to the criminal tax cases. It may include even when the IRS considers a person as a potential fugitive from tax debt. Further details are available in tax code's Section 7345. The IRS website also hosts detailed content. Post the IRS reporting the individual to State Department, the function of the passport will be disabled. It is to be kept in mind that such stringent measures are applied only to huge tax debts, in the $50,000 region. This figure could be inclusive of interest and penalties.
Following a proper procedure is vital in such cases. The IRS generally sends multiple notices before a tax debt rolls to such a stage. The recipient must respond and must keep protesting. In case the Notice of Proposed Deficiency is received by the delinquent taxpayer, then a protest must be launched prior to the deadline. This protest will put the applicant in IRS Appeals Office, where the applicant will be offered another chance to solve this situation.