The IRS' main obligation centers on collecting current and past due taxes. Because it can be difficult to collect money from people who travel and live overseas, the federal government has implemented laws that could make it more challenging for seriously delinquent taxpayers to get a passport. If you owe taxes and plan to travel internationally, you should realize how your tax debt could impact your ability to get or renew your passport.
The Fixing America's Surface Transportation Act
The Fixing America's Surface Transportation Act, or FAST, was signed into law on December 4, 2015 and stands out as the primary piece of legislation aimed at limiting the travel of delinquent taxpayers. This law states that Americans owing $50,000 or more in back taxes will be prohibited when it comes to receiving or renewing a passport.The legislation also is aimed at tax debtors whose assets and property have been levied by the IRS. The $50,000 back tax amount can include not only the principle but also any penalties, fines, administrative fees, and costs associated with enforcing and collecting the debt. By law, however, the IRS must notify taxpayers in writing if their owed taxes threaten their ability to get a passport or travel outside of the country.
People Impacted by FAST
As noted, this act is designed to target select taxpayers who are seriously delinquent in paying their back taxes. The primary people who are impacted by FAST include taxpayers who:- owe $50,000 or more to the IRS
- have not made attempts to pay on or resolve the debt
- have assets like income and bank accounts or property like houses or real estate levied by the IRS
- live or work overseas and owe $50,000 or more because of their refusal or misunderstanding of filing and paying taxes
- live in the U.S. and have accrued this amount of back taxes because of their negligence in reporting income on overseas investments or bank accounts
The legislation does not apply to taxpayers who:
- owe less than $50,000 in back taxes
- are set up on a payment arrangement with the IRS to pay their delinquent taxes
- are petitioning for debt relief or whose cases have been suspended because of due process hearings
If you meet any of these criteria, you may be able to get or renew your passport and travel internationally unimpeded.
Resolving Your Seriously Delinquent Tax Debt
The IRS makes available a number of different options to resolve your seriously delinquent tax obligation. You may be eligible for tax debt resolutions like:- An Offer in Compromise, which is essentially a settlement allowing you to pay a reasonable lump sum to satisfy your debt
- Monthly installment agreement, which lets you make monthly payments on your debt. The arrangement is based on your current income and ability to pay
- Currently Not Collectible, or CNC, status, which indicates that you are unable to pay anything at all and puts your debt into a non-collectible status. You will continue to accrue interest and penalties, however.
- Paying in full, which could be the best option if you have the income or liquid assets to satisfy the debts
Before you agree to any of these solutions, you may find it best to consult with a tax professional who can advise you on your best options for resolving your tax debt.
Your back taxes can impact your ability to get or renew a passport and travel abroad. You can plan accordingly by learning about legislation that could prevent you from flying overseas until you resolve your tax debt.
