The Internal Revenue Service announced on 16 January 2018 that they strongly encourage taxpayers who are behind on their taxes to pay the amount owed or enter into a payment agreement with the IRS if the amount owed is more than $50,000 to avoid putting their US passport into jeopardy.

The Fixing America’s Surface Transportation (FAST) Act, which was signed into law in December 2015, requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. The FAST Act also requires the State Department to deny their passport application or deny renewal of their US passport. In some cases, the State Department may revoke their passport, even if the individual is outside of the United States. (In such cases a temporary passport for travel only to the US may be issued.)

From January 2018 the IRS will begin to implementation of this new procedure which will affect taxpayers with a seriously delinquent tax debt (currently $50,000 in back taxes, penalties and interest) for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge the notice has expired or the IRS has issued a levy.

If a taxpayer is in this situation then the IRS will notify the taxpayer that a certification of seriously delinquent tax debt has been transmitted to the State Department. There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved instalment agreement
• Paying the tax debt timely under an accepted offer in compromise
• Paying the tax debt timely under the terms of a settlement agreement with Department of Justice
• Having request or have a pending collection due process appeal with a levy
• Having collection suspend because a taxpayer has made an innocent spouse election or requested innocent spouse relief

A US passport will not be at risk under this program for any taxpayer:

• Who is in bankruptcy
• Who is identified by the IRS as a victim of tax-related identity theft
• Whose account the IRS has determined is currently not collectable due to hardship
• Who is located within a federally declared disaster area
• Who has a request pending with the IRS for an instalment agreement
• Who has a pending offer in compromise with the IRS
• Who has an IRS accepted adjustment that will satisfy the debt in full

If you have fallen behind in paying your US tax obligations you should come forward and pay the amount owe or enter into a payment plan with the IRS. If you are in this situation, please give us a call to discuss or email an adviser.