Highlights

  • Nothing New
  • Could YOU be Affected?
  • Avoiding “THAT” Label
  • You’re on Their List!
  • Wrap Up

Nothing New

As everyone knows, any form of international travel requires a valid passport. This is definitely nothing new. What many people aren’t aware of is that the preliminary steps to restrict or even revoke passports began back in 2011. The Government Accountability Office (GAO) found that, in 2008, the State Department issued more than 224,000 passports to people who collectively owed nearly $6 billion in unpaid federal taxes. The IRS states that it will begin enforcing these passport restrictions this year.

Could YOU be Affected?

Those owing more than $50,000 in cumulative taxes, interest, and penalties are labeled, “seriously delinquent” by the IRS. This loathsome label pushes you to the top of the IRS’s list to be sent to the State Department so that your international travel privileges can be suspended or revoked altogether.  $50,000 seems like a substantial number; however, since the amount is cumulative, it is easier than you might think to rack up such a hefty tab. To be enforceable, the IRS must have “assessed the debt”—fancy IRS language for filing a Notice of Federal Tax Lien and exhausting all remedies to collect the unpaid balance. Once you have received these notices, you have been stamped with the dreaded “seriously delinquent” label!

Avoiding “THAT” Label

We love our labels in today’s society, but the dreaded “seriously delinquent” label is one that no one wants! The IRS will remove that label when you complete one of a few steps. Firstly, you could enter into a payment plan with the IRS or offer a satisfactory offer in compromise that would meet the obligation. The IRS is pretty strict when it comes to their version of a satisfactory payment plan. In other words, paying a couple dollars to get your outstanding tab under that $50,000 ceiling isn’t going to work. Typically speaking, if you owe $50,000 or less, the IRS deems a satisfactory installment plan as one that is fully satisfied in 72 months or fewer. If you owe a rather large amount, the IRS no longer classifies you as “seriously delinquent” if you pay your outstanding tax bill down to between $50,001 and $100,000 and pay that amount in full over the course of 84 months or fewer.

A second way that the IRS will no longer label you as “seriously delinquent” is if you were to request innocent spouse relief. This is an option for those, who through no fault of their own, had a spouse who incurred cumulative taxes, interest, and penalties of greater than $50,000.

Thirdly and finally, you are no longer “seriously delinquent” in the IRS’s opinion if you request a collection due process hearing after the receipt of the IRS levy.

You’re on Their List!

When the IRS deems your unpaid taxes as “seriously delinquent” and notifies the State Department, you will receive a Notice CP508C. This is your official notice that your passport is in peril.  If you feel there is some mistake or have questions, you have 30 days to call the phone number listed at the top of the notice. If you have already paid the taxes or the taxes are no longer owed (such as if the statute of limitations has expired), send all payment information and other documentation to the address listed at the top left corner of the notice. The State Department will hold your application for 90 days to give you time to either satisfy the debt in full, resolve any certifications which were inaccurately made, or enter into a satisfactory payment plan or offer in compromise with the IRS.

If the IRS deems that your outstanding debt is satisfied, is no longer legally enforceable, or no longer meets the “seriously delinquent” qualifications, the IRS will send you a Notice CP508R. The IRS will also notify the State Department that you are no longer “blacklisted” from international travel. Once you receive this notice, your passport is no longer in jeopardy and you are free to roam the globe!

Wrap Up

In summary, the revocation or cancellation of your passport certainly should not come as a shock. You will receive ample notice from the IRS of outstanding taxes, interest, and penalties in the form of assessments, tax liens, and other documentation. Once these amounts combine to $50,000 or more, your passport is in danger of being restricted, revoked, or even canceled. If your information has been sent to the State Department and has been flagged for passport restriction, you will receive a Notice CP508C. At this point, your passport will soon be restricted in some way and you will need to develop a plan that will satisfy your outstanding obligations before your passport will be reinstated. This is a most stressful situation in which you could certainly use professional advice. Wealth Builders CPAs has qualified professionals with years of professional tax experience.  Let us help you resolve it! Please contact our office today so we can help you develop a workable plan to get your passport restored!

 

 

Bradford, W. M., “Unpaid Taxes? Goodbye Passport”. Bradford Tax Institute. June 2017, bradfordtaxinstitute.com/Content/Passport-Trouble.aspx. Accessed 14 Aug. 2017.

“Revocation or Denial of Passport in Case of Certain Unpaid Taxes.” IRS, 2 June 2017, www.irs.gov/businesses/small-business-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes. Accessed 21 August 2017.