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Tax delinquency could mean you can't get there from here

Do you remember the FAST Act? Despite the implications of the acronym on that 2015 law, there are elements of it that have the potential for putting the brakes on some individual's travel plans. As we noted in a pair of posts a year ago at this time, while the U.S. State Department is responsible for issuing passports to U.S. citizens, the IRS has authority to leverage this identification form to collect delinquent taxes.

According to provisions of the law, the IRS can seek to have a passport revoked or denied if a person has seriously delinquent tax debt. It even specifies what serious means – a legally enforceable tax liability of more than $50,000. That includes the principle amount owed, plus any interest or penalties.

There are exceptions. The IRS says it won't take action against a delinquent taxpayer considered to be in "good standing" by virtue of having an installment agreement in place. However, according to some experts, it's unclear if good standing extends to other arrangements, such as a partial-pay agreement or in currently not collectible status. The reason being, the latter two arrangements don't cover the entire tax bill.

It also isn't clear if the IRS will restore a person to good standing if they agree to pay the full tax bill under an extension.

We mention this because next month the IRS is due to start notifying the State Department about who is seriously delinquent on federal taxes. At the same time, it will be sending out notices to the affected taxpayers.

To avoid possible passport restrictions experts recommend that those who fit the definition of seriously delinquent as set out above need to restore their good standing with the IRS by paying off the total amount due or working out a payment plan that covers the total.

If you have questions about all the possible options related to this issue, consulting an experienced and skilled attorney for answers.

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