Do you owe back taxes? You could lose your passport.
Currently, there is a bill in the process of being approved by Congress, which would not allow Americans to leave the country if they owe certain tax debts. Senate Bill 1813, which has already been passed by the Senate, would give the Secretary of State the authority to revoke or deny a passport to any U.S. citizen with a “significant tax debt.” A “significant tax debt” is defined as an IRS debt of $50,000 or more, in which a lien or levy notice has been issued.
The bill is gaining strong opposition because the authority to revoke or deny the passport does not require any judicial proceeding. The action of revoking or denying the passport is strictly an administrative procedure without any due process provisions. Many people disagree with this application because often times the IRS debt is in dispute. Additionally, the taxpayer does not have to be convicted of tax evasion or any crime, only that the debt must meet the requirement.
Although the bill is expected to receive opposition from the House Republicans, it does have a lot of supporters. Much of this support is gained from the fact that the provision is expected to raise $750 million in tax revenue.
There is some opportunity for relief. If a collection due process hearing has been requested on the debt collection or if the debt is actively being paid through an approved installment agreement, the provision does not apply. Therefore, for taxpayers with an IRS debt of $50,000 or more it is imperative to setup a payment plan and put their tax debt in good standing so that they do not risk losing the privilege of having a valid U.S. passport.
Don’t risk losing your passport. If you have a tax debt, call Hone Maxwell LLP today so we can assist you in resolving your tax debt.