If you have unpaid tax problems, repayment is no longer your sole concern. Within recent years, the government has been cracking down on people who fail to pay their taxes and one of the possible repercussions is losing your passport.
Why is this happening and what should you do about it? Continue reading to find out.
What Is the Fixing America’s Surface Transportation Act?
The Fixing America’s Surface Transportation Act was signed into law by President Barack Obama on December 16, 2015, to help finance and rebuild the country’s highway and transit systems. The Act is the largest transportation spending bill in the United States history and is expected to create and save about 4.4 million jobs and give a $227 billion economic impact.
A major provision of the FAST Act is the requirement for the government to check whether or not people owe taxes before giving them passports.
The State Department has been using an automated process to check for tax delinquency among passport applicants since the FAST Act was passed. Records from the years as far back as 2012 are used as references.
The State Department has said that if you have unresolved taxes, you may have to pay them before you apply for a new passport.
Will the IRS Report All Delinquent Debtors?
If you are a delinquent debtor, you will be notified that you have an endangered passport. However, there’s no need to panic. The main goal of the government is to motivate people to repay their IRS debts than to prohibit citizens from traveling.
If you have back taxes and you want to avoid this penalty, you must meet one of the following circumstances:
- You are serving in a combat zone
- You are a victim of identity theft
- You requested Innocent Spouse Relief
- You have an existing agreement with IRS on repayment
- You appealed a tax levy
- You are filing for bankruptcy
What Should You Do If You Are Warned of a Revoked Passport Because of Being a Delinquent Debtor?
1. Work Out an IRS Payment Plan
If your passport is in jeopardy because of unpaid IRS debts, the first thing that you should do is to contact the IRS. Talk to them about your tax debt and see what options are available for the repayment.
2. Use Offer in Compromise
If you are a delinquent tax debtor, you can discuss with the IRS about your financial situation. If you can’t pay the full amount of taxes but you have a realistic chance of paying a lesser amount, you may be able to file an Offer in Compromise.
Whether or not it will be accepted is up to the IRS, but they will review the tax information submitted and the tax delinquency.
Using this option, you can negotiate a lump sum amount that you can pay on your taxes instead of paying the full amount.
3. Use the In-Business Trust Fund Express Installment Agreement.
The IRS is offering In-Business Trust Fund Express Installment Agreement. If you are a sole proprietor, partnership, or corporation and your debt is $25,000 or less, you can enter into an installment agreement.
You will have to pay a $225 fee, but the IRS doesn’t levy late-filing or late-payment penalties.
If you are a business owner, this is the best option for you. However, if your business is unincorporated, such as a sole proprietorship, you can’t use this option.
If you know that you have unpaid taxes, it is important to act fast. Doing nothing may cause you to lose your passport, and suffer more from other consequences.
Do you need tax debt relief? Axiom Tax Resolution Group can help you. A tax resolution specialist from our team will guide you through possible solutions so you can free yourself from debt and work toward a better financial future. Give us a call today to learn more.