Have a tax debt near $50,000? You may find yourself unable to travel.
In December, President Barack Obama signed a 5-year infrastructure spending bill. Sandwiched within this bill aimed to improve our nation’s highway and transit systems, was an IRS passport law.
With the new law, the IRS can now restrict travel by revoking or denying passports for tax debtors who owe over $50,000.
How will this affect me?
Depends.
For starters, the $50,000 tax threshold is not based upon the original tax debt, but the tax debt owed after penalties and interest. This means that those who owe back taxes may find themselves on the list without even realizing it.
Secondly, thanks to the Real ID Act, individuals in Minnesota, New Hampshire, New York, and Louisiana may soon need passports to fly domestically. These states are facing non-compliance to the law so residents may find that their state IDs will not work for air travel. That means if you owe over $50,000 the IRS could potentially even keep you from traveling within the United States.
Thirdly, this new IRS passport law sets a precedent. For now, travel can be restricted for those owing over $50,000, but that doesn’t mean this threshold won’t or can’t change. Really it will probably depend on a number of factors, including the economy, number of open tax debt cases, etc.
Are there exceptions?
Yes!
Luckily this new IRS passport law does not apply to individuals contesting an IRS tax bill. It also does not apply to those who are making timely payments through an installment agreement (which is why, even though Iggy Azalea has a tax debt of nearly $400,000 she can still travel). And passports may be issued to debtors for special emergency situations or humanitarian reasons (although the inner workings of these exceptions are murky).
I owe money to the IRS. What can I do?
You never want to be indebted to the IRS. If you have found yourself in this situation, you need to work towards a resolution quickly and avoid wage garnishment. Direct Tax Relief helps individuals across the nation get tax debt relief from the IRS. Give us a call at 1-877-505-4829 to get started on the process immediately.
Sources:
- https://www.forbes.com/sites/robertwood/2016/01/04/2016-brings-irs-power-over-passports-use-of-private-debt-collectors/?sh=2992826e1649
- https://www.forbes.com/sites/robertwood/2016/04/05/iggy-azaleas-400000-irs-tax-lien-dims-10-carat-ring-but-irs-cant-revoke-her-passport/?sh=f437ae72c571
- https://money.cnn.com/2015/10/14/technology/passport-license-domestic-flights
