The Internal Revenue Service (IRS) has a number of tools to help in collection of taxes. One of the more commonly used is the threat of fines, but a new tool provided by Congress is getting criticized not just by those who could be impacted, but by tax professionals as well.
The IRS’ new, contentious tool: What is it? In December of 2015, Congress passed H.R. 22, also referred to as the FAST Act. Although on a quick glance the bill appears to deal with issues related to highway safety and roadway repairs, there is a provision deep within the language that addresses the IRS. More specifically, it gives the IRS the power to take away passports.
Sec. 32101 states that the IRS has the ability to revoke or limit the passport of anyone with a “tax debt in excess of $50,000.” A recent piece in Forbes discussed the potential impact of the provision, noting that the language used in this law essentially allows the IRS to notify the State Department if someone is accused of owing taxes. This can result in refusal of a passport, making it impossible to travel out of the country for business or pleasure.
More on the change: When does this apply? Thankfully the ban does not apply to every allegation of an owed tax. It is designed to apply when one of two criteria is met.
The first is that the person that would be impacted by this ban receives a notice that a federal tax lien was filed “and all administrative remedies” have either lapsed or already been exhausted. The second is that a levy was issued.
Tips for individuals accused of owing taxes: What should you do? This latest weapon to demand tax payment by the IRS is just one of many. As a result, whether you plan to travel or not those who are accused of owing taxes should take the accusations seriously.
Those who are in this situation have options. There are ways to navigate through the issue, find a resolution and come into compliance before the dispute causes further damage. Contact an experienced tax law attorney to determine the right option for you.