When you owe back taxes, the penalties you face don’t only deal with things like tax evasion charges or lots of bills — it can also affect your quality of life.
One of the biggest ways the IRS can affect your quality of life is by snatching your passport.
If you’re wondering “can the IRS take my passport?”, read below as we explore the answer to that question and other details that cover actions you can take to protect yourself.
Can the IRS Take My Passport?
There have been several tax changes throughout the years, but one of the most life-changing involves the IRS’ ability to take your passport.
Yes, it can. The nation’s most aggressive collection agency has a new enforcement tool: Passport denial and revocation. Passed into law back in 2015, the IRS has only recently worked out the process with the State Department for identifying and certifying taxpayers with more than $51,000 in back taxes, interest, and penalties.
What do you need to do to avoid an emergency where you could lose your passport? We will answer some frequently asked questions.
So, the answer is yes, the IRS can take your passport if you fall behind on taxes. However, it’s not that cut and dry.
There are criteria that they use to decide whether they’ll revoke your passport. Consider these points below to see how it happens:
Has The IRS Denied Or Revoked Passports?
This is unclear, but the IRS claims one taxpayer paid more than $1 million to avoid a denied passport application. Currently, the IRS and State Department are compiling a list of taxpayers (approximately 362,000, which should be completed by the end of 2019).
Then when one of these people applies for a passport or renewal, it will be denied.
So far, no plans are underway to revoke and seize valid passports.
How Will I Know When The IRS Has Reported Me To The State Department?
You should receive notice from an assessment of past-due taxes that includes penalties and interest. Then the Service also needs to have started the lien/levy process before certifying you to the State Department.
The National Taxpayer Advocate has complained the process does not provide enough time for a taxpayer to solve any tax problems and avoid certification. She advocates a 30-day notice to provide a taxpayer time to solve the tax problem.
1. If Your Taxes are Seriously Delinquent
When your taxes are delinquent, the IRS could revoke your passport.
While the IRS hasn’t outlined a specific number of years, you don’t have anything to worry about if you’re only a little behind. However, rather than let it get to this point, make sure that you stay on top of your tax bill so that the IRS never exercises this option.
2. You Owe a Large Amount in Past-Due Taxes
Don’t think that falling behind on taxes is something that only you’re dealing with.
There are plenty of people that find themselves in plenty of tax debt. Because this is such a common issue, don’t think that the IRS is going to come after you immediately after missing the tax deadline.
While you should always file within the deadline, the IRS generally won’t take measures like revoking your passport unless you owe $51,000 or more in back taxes.
Keep an eye on your tax bill so that you know exactly how much money you owe and whether the passport will come into play.
3. There Were No Arrangements or Provisions Mad
Most of the time, the IRS won’t come after your passport if you make payment arrangements.
When you can’t pay what you owe immediately, the IRS urges you to set up an installment agreement. This is a payment plan that lets you chop your bill into monthly payments instead of paying it all in one lump sum.
Check out installment agreements after you file to see what sort of options you have.
I Can’t Pay My Full Balance, What Are My Options?
The good news is that there are a few, but it is crucial to take action to avoid a difficult situation that could impact your upcoming travel schedule. These actions will delay certification and protect your passport. Your passport can be one of the priciest assets you have seized because it limits your life experience.
If you have five figures of tax debt and your passport is at risk of seizure, the points below will help you rectify the situation.
1. Set Up an Installment Plan
Like you just learned, the IRS will typically show leniency as long as you’ve made arrangements.
Figure out everything you need to do to set up an installment arrangement plan to take care of your taxes.
You can apply for an installment agreement plan on the IRS’ website. In many situations, you’ll receive approval on the spot and will get further correspondence in the mail so that you can pay your taxes monthly.
When you pay, it’ll be in the form of debit or electronic funds transfer (EFT) sent to a third-party vendor. This vendor will send the money to the IRS and you’ll get monthly statements related to how much you owe.
As you apply, you’ll let the IRS know how much you can pay on a monthly schedule. They’ll confirm your amount or let you know another amount that they feel comfortable with you paying each month.
The plan is official once you sign it, and shows what date each month you want to make your payment. You can make payments manually or in the form of an automatic payment tied to your bank.
By setting up an installment plan, you’re showing the IRS that you’re serious and aware of your tax debt.
2. Get a Personal Loan to Pay Off Taxes
If you want to pay your taxes off now instead of signing up for payments, a personal loan can help.
By consolidating your taxes and paying them off with a personal loan, you’ll still have debt, but you won’t owe the IRS. This way, you can pay your loan back at your leisure without having to worry about losing your passport.
Touch base with different personal loan providers at national banks, community banks, and credit unions in your area. Look into interest rates and what sort of terms you can sign on for.
Search for the best terms and make sure to pay off your taxes right away, as opposed to dipping into part of it and still owing tax money.
3. Pay as Much as You Can
You’ll generally keep the IRS off your back when you tackle as much of the tax debt as you can afford.
By reducing your tax debt with a payment, you can avoid having your passport revoked. In addition to the lump-sum payment, write a notarized letter to the IRS letting them know that you are aware of your debt and that you will address it.
4. Write a Letter to the IRS Stating Your Circumstances
Don’t hesitate to touch base with the IRS and level with them.
Get the letter notarized, date it, and acknowledge the amount owed on your taxes. The IRS will likely assign an agent to your case, get in touch with you, and let you know what options you have.
5. Work to Get Your Penalties Removed
A tax abatement is also an option when you are trying to handle your debt.
When you get an abatement, you will be able to remove fees due to late payments. By reaching out to some professionals that can assist you with your tax case, removing penalty payments can make it easier to address your past-due bill.
6. Hire the Assistance of a Tax Attorney
Having access to a tax lawyer could be what you need to rectify these issues.
Be sure to hire a licensed tax lawyer that understands your situation. Whether you are dealing with trying to get your passport back or finding a deal for your tax bill, an attorney can walk you through your options and help you protect yourself.
Why Should You Fight to Keep Your Passport?
When trying to rectify your tax case, you need to understand why it’s important to fight to keep your passport. Consider the following:
1. It’s a Sign of How Bad Your Tax Situation Has Gotten
Fighting to keep your passport is about more than your travel needs. Like having your wages garnished or license suspended, having your passport taken is one of those indicators that you need to address your debt.
Let handling your passport motivate you to handle your tax debt.
2. It Limits Your Travel Potential
Keeping your passport valid will allow you to travel for either business or pleasure.
You may have to travel internationally for work or live part of the year abroad. Getting off the “seriously delinquent tax debt” list is much harder than staying off it, to begin with. Send us an email with your concerns, so one of our attorneys can explain more.
Our skilled attorneys represent taxpayers across the country and have the experience to find an answer right for you.
Whether you’re planning a family vacation or want the opportunity to go on exotic weekend getaways, you’ll want to have your passport. Keep your travel opportunities open by handling your passport situation.
3. You Limit Your Job Potential
A suspended passport could decrease career opportunities.
It can even jeopardize your career if you have a security clearance or a job that requires travel. Back taxes can also show up on your credit report. Since many companies now check your credit report during the hiring process, this could stop you from getting a job.
4. Travel Laws are Changing
As of new laws passed in 2018, you’ll need a passport to get on a plane both domestically and internationally.
Because of this rule, you’ll need to address any passport problems before the law takes full effect. States are offering Real IDs instead of state licenses to address these federal travel laws as well.
5. Motivation to Fix Your Finances
When your passport is at risk, it should light a fire under you to address your tax issues.
The prospect of losing your passport will help you address any financial problems. Use this as an opportunity to get finances in order and take care of this year’s tax problems.
Fix Your Passport Problems and Get Your Taxes Under Control
You might be wondering, “Can the IRS take my passport?”.
The answer to that question is an absolute yes. However, you have recourse, as long as you consider the information above.
Let these tips assist you so that you can keep your passport and address your taxes at the same time. This will help you manage your tax bill and finances.
Take time to reach out to us for the tax help you need.