Not only is the IRS going
to manage your healthcare, they are going to decide whether or not you get a
Tacked into a highway bill that has recently
passed the U.S. Senate has a provision that would allow the State Department to deny
passports to US taxpayers who owe delinquent tax debts to the IRS.
If you owe more than $50,000 to the IRS,
and if this Bill is signed into law by the president, you could be denied your
right to leave the United States.
Who can be denied a passport for delinquent IRS
The Bill, if signed into law, would have dire consequences
for those with big unpaid and unresolved tax bills. The law would apply to
those who (1) owe more than $50,000 to the IRS,
and in addition, have been issued a (2) notice of federal tax lien, or
a final notice of intent to levy. Those with smaller tax debts, and those
tax debt proposed by an IRS audit and not
finalized are not affected.
Does this mean if you owe money to the IRS,
you can?t get a passport? Or your passport will be revoked?
No. First of all this bill is not law yet. Second, even if
it become law, the bill clearly states that if you are in a repayment plan, or installment
agreement with the IRS, your passport
will not be denied. The same is true even if you settle your back
taxes with an Offer in Compromise, you can still get a passport.
If your case is still pending with IRS
appeals with a Collection Due Process hearing, and there is no final
determination letter, you can still get your Passport renewed.
Also there are exceptions for those attempting to return to the US
and those who wish to leave the US
for family emergencies. It is unclear who will be in charge of who will be
determining what a family emergency is.
But what about those in Currently Non-Collectible status?
There it is a little tricky. Currently Non-Collectible
status is when the IRS agrees the taxpayer
is in a hardship and agrees not demand any money, aside from holding on to tax
refunds (there is an additional requirement is that a taxpayer not run up any
new tax debts). But believe it or not, there is actually no statute that
authorizes Currently Non-Collectible or ?hardship? status.
Known as Code 530 to IRS insiders, ?CNC
status? is authorized by IRS policy
statement 5-71 as referenced in the Internal Revenue Manual
188.8.131.52. This bill makes no reference to those in CNC.
Probably not lose your passport for FBAR penalties?
FBAR penalties are penalties the IRS
imposing for failure to properly report foreign bank accounts. So can you lose
you passport for unpaid FBAR penalties? Probably not.
First, the bill is written rather vaguely. It says a ?tax.? Well, FBAR
penalties aren?t really a tax and this is why it makes a difference. The basis
for the imposition of taxes comes from Title 26 of the US
tax code. The basis for the implementation of FBAR penalties comes from Title
31, and in particular the Bank Secrecy Act. This bill seeks to amend
would amend Title 26, and not Title 31. So liabilities from Title 31 would,
arguable, be exempt.
Further supporting the argument that this would not apply to outstanding FBAR
penalties is the fact that the administrative remedies available to past due tax
obligations are not available to FBAR penalty assessments.