How Your Delinquent Tax Debt May Affect Your Ability to Travel

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Are you looking to travel outside of the country? If you owe more than $51,000 in back taxes, the federal government has the right to keep you in the United States. The IRS has issued rules for those who travel outside of the country to pay up or lose the ability to get a passport.

In 2019, the IRS began sending a form to the State Department called the Certification of Individuals With Seriously Delinquent Tax Debt. As a part of the FAST Act, the IRS is issuing these forms as a way to get citizens who owe a lot of money to the Federal Government to pay off their tax debt.

We are going to talk about how the new regulations work and why it’s essential to take care of any tax delinquencies before applying for a new passport or to get your current one renewed down below.

Tax Education tax debt

What Is the FAST Act?

Also known as the Fixing America’s Surface Transportation Act, it’s a funding and authorization bill that governs federal surface transportation spending in the United States. Passed overwhelmingly by a bipartisan vote to help with infrastructure the government enforced the law in 2015 and the CP508C is just a part of the bill that is being used to get the appropriate funds for any repairs and to fund new projects.

The law can unintentionally affect travelers and those who are living overseas, especially if they miscalculated something when they were filing your taxes. Not only can it keep you from leaving the country by denying passports or revoking current visas, but it will also affect those who are living overseas if you owe more than $50,000.

Let’s get into how having unpaid tax debt can affect you if you owe money to the Internal Revenue Service.

Tax Education tax debt

How Can It Affect Travel?

For travelers who owe back taxes to the IRS, your travel plans may stall until you contact them and work out a payment plan or pay the full amount. That is because the IRS will send a CP508C form to the State Department and they are required to revoke your current passport or deny your application for a new one. It can make traveling challenging to achieve, especially if you are visiting or living overseas.

If you are already abroad for school, work or play, you know how important it is to have a valid passport on hand. Your passport is also a form of identification, as well as the means to enter and leave a country legally. For those who are living overseas, this helps American’s abroad get work, a bank account, and housing.

But there are exceptions to rule, like everything else. The IRS will not consider you delinquent if you were a victim of identity theft or are filing Bankruptcy. Also, if you have a Power of Attorney, they will not contact you about your tax filing status.

Tax Education tax debt

What If You Are Overseas?

If you are an expat living overseas, it’s already complicated when it comes to filing income taxes. Not only do you have to pay into the country in which you’re staying, but the United States citizens pay income taxes to the IRS. The only exceptions are what you paid in taxes to the country you live in exceeds your FEITE or if you qualify for the Foreign Earned Income Tax Exclusion, which is an exemption for expats who are making under $100,000 per year in their country of residence.

But if your tax preparer hits a wrong number, then the FAST Act can affect you in many different ways including:

Tax Education tax debt

Identification

Expats use passports as a form of identification so that they can gain employment, housing, a bank account, and other means of daily living. If they receive a notice, it is being revoked due to tax debt; then it will affect their methods to survive.

Tax Education tax debt

Travel to and from the Country

Their only means of leaving and returning to the country in which they live has come to an end. If the IRS revokes your passport, it is only suitable for you to return to the United States.

More Problems Than Solutions

If the government forces you to return to the US, it can cause more problems than solutions. Depending on the amount of tax you owe, it can result in jail time. Unfortunately, expats may have a more difficult time finding an IRS lawyer to represent them.

You May Not Be Contacted About Your Debt

Because there aren’t anymore worldwide IRS locations, expats may not receive notice that they owe any tax debt, including interest and fees. Many American citizens abroad are not told about relevant tax documents they will need, including the Foreign Bank Account Report, which can lead to problems later on down the road.

Can Be Difficult to Reach

Contacting the IRS as an overseas expat, is difficult, especially when they do not have locations around the globe and sending snail-mail can cause its own set of problems. Often, many expats may not get a notification about their tax status.

Lack of Notification

Sometimes the tax preparer who worked on your tax forms may get a notification but never told you, which can lead to unnecessary problems. Also, when filing your taxes, due to how slow it is to send mail overseas, your charges may up being filed late with no fault of your own, resulting in penalties and fees.

Longer Wait Times and More Costly

Because the federal government has been cutting jobs with the IRS, they have shut down overseas locations as well as eliminating the international helpline. Also, the reduction of jobs at the IRS leads to longer waiting periods on the phone, as well as high charges on your phone bill. On top of that, calling and hiring a reputable IRS attorney in the United States can become costly too.

How Can I Check If My Passport Is Revoked?

If you owe more than $50,000 in unpaid taxes, there is a good possibility that the government will take your passport away from you. But, the IRS is not obligated to notify you or a power of attorney if your passport has been revoked. That can leave travelers and expats in a sticky situation if their passport gets revoked while they’re already abroad.

Since the implementations in 2018, there have been more than 362,000 American citizens had their passports taken from them, due to unpaid income taxes. So how do you find out if the government took your passport due to tax debt? There are a few options that may help you if the IRS revokes your passport.

  • You can promptly contact the IRS directly about any concerns with your passport.
  • Contact US Passport Services about the situation as soon as possible.

The good news is if you have only received a letter in the mail about your delinquent taxes, then you still have time to find an experienced tax attorney to help you work something out with the IRS. The State Department and IRS give you 90 days to resolve your tax delinquency, before issuing a denial. Also, if someone steals your identity, you may have more leeway with the IRS when it comes to paying your back taxes.

You also have the choice to contact the IRS directly and work out something to help pay your tax debt. We are going to talk about that a little more in the next section.

How Can You Resolve Your Unpaid Tax Debt?

You have received a letter in the mail from either the IRS or State Department about your delinquent income taxes, and now you want to find out how to can resolve the problem before it gets worse. Unpaid taxes does not only lead to getting your passport revoked or denied, but it can also lead to some undesired results such as:

  • Jail-time
  • Garnishment of Wages and future tax returns
  • Liens on your property
  • Hefty Fines
  • And much more

Taking care of your tax debt is highly essential to prevent you from needlessly going through the complications when dealing with the IRS. There are many ways that you can take care of your delinquency, which include:

  • Pay what you owe in full
  • Make payments on an agreed upon plan between you and the IRS
  • Get an Offer in Compromise
  • Have a settlement agreement through the Department of Justice
  • They have a requested or pending due process appeal with a levy
  • A request for an Innocent Spouse Relief

Also, the IRS has several programs to help delinquent taxpayers pay off what they owe — going through qualified IRS lawyers so you can discuss your options with them and they can walk you through the process.

Why You Need a Qualified Tax Attorney

When you have outstanding tax debt, it is best to contact a qualified IRS attorney to prevent your passport from getting revoked, as well as other consequences when your taxes fall behind. At Silver Tax Group, we are the number one IRS lawyers in the state of Michigan. We have more than four decades of combined tax experience and are here to represent you in your critical time of need.

We offer a free consultation so we can learn more about your case and find ways to help you solve your unpaid tax debt. If you need to go through the complications of navigating the IRS, visit our site, today.

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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