5 Key Takeaways

• 1. The IRS can revoke or deny your passport if you owe more than $50,000.
• 2. Penalties and interest count toward the $50,000 threshold, so the total adds up fast.
• 3. Residents in some states may need a passport for domestic air travel under the Real ID Act.
• 4. Exceptions exist for those in repayment programs or facing emergencies.
• 5. Working with tax professionals can help resolve debt and reinstate your passport.

What Is the IRS Passport Law?

In December 2015, a five-year infrastructure spending bill included a provision granting the IRS the authority to limit travel for people with significant tax debt. 

If you owe more than $50,000 (including penalties and interest), the State Department can deny your passport application or even revoke an existing passport.

This law is part of the government’s efforts to collect unpaid taxes, but it’s causing concern for many taxpayers, especially those unaware of their growing debt.

How Does It Affect You?

1. Debt Threshold Includes Penalties

The $50,000 limit isn’t just your original tax debt—it includes penalties and interest, which can increase the total quickly. For example, a smaller initial debt can snowball over time if left unpaid.

2. Domestic Travel Could Be Impacted

Residents of Minnesota, New York, New Hampshire, and Louisiana face unique challenges due to the Real ID Act. 

If these states don’t comply, residents may need a passport for domestic flights. For tax debtors in these states, this could restrict even domestic air travel.

3. Lower Thresholds in the Future?

While the current threshold is $50,000, it could change. Economic factors and the number of unresolved tax cases might prompt lawmakers to lower the limit, impacting more taxpayers.

Are There Exceptions?

1. Active Disputes

If you’re contesting a tax bill, the restriction doesn’t apply. Active disputes show the IRS that you’re addressing the issue, even if it’s not resolved yet. Filing an appeal or requesting a review can buy you time to avoid travel restrictions.

2. Installment Agreements

Those making regular payments through an IRS program, like an installment agreement, can keep their passports. 

These agreements show the IRS that you’re serious about repaying your debt. As long as you stay current with your payments, your passport won’t be affected.

3. Emergencies

In some cases, the State Department may issue passports for emergencies or humanitarian reasons, though the details remain unclear. 

This could include situations like medical needs or family emergencies abroad. However, approvals for these exceptions can be unpredictable and depend on the circumstances.

Celebrities like Iggy Azalea, who reportedly owes nearly $400,000, can still travel because they’re on repayment plans. If a public figure can find a solution, it’s a good reminder that resolving tax debt is possible with the right steps.

What Can You Do If You Owe Money to the IRS?

Ignoring tax debt isn’t an option. The IRS has powerful collection tools, including wage garnishments, tax liens, and now passport restrictions.

1. Understand Your Debt

Start by checking your tax transcripts or contacting the IRS directly to confirm your debt total. Remember, penalties and interest often make the actual amount much higher than you expect.

2. Consider Professional Help

Dealing with the IRS can be intimidating. Hiring a tax professional—like a CPA or enrolled agent—can save you time and stress. Tax professionals can help you negotiate repayment plans, challenge incorrect assessments, or even reduce your debt.

Unlike attorneys, services like Direct Tax Relief offer affordable solutions with a full team of experts. You don’t have to overpay for legal representation when a specialized team can handle it.

3. Act Quickly

The sooner you take action, the better. Penalties and interest add up daily, increasing your total debt and the likelihood of passport restrictions.

Why Hire a Tax Relief Professional?

Many people think they can handle tax issues themselves, but navigating IRS rules isn’t easy. A tax relief professional can:

1. Negotiate Favorable Terms

Professionals know how to secure better repayment terms or settle for less than the total owed.

2. Save Time

The IRS process is time-consuming. Experts handle the paperwork and communication for you.

3. Prevent Costly Mistakes

Filing incorrect forms or missing deadlines can worsen your situation.

Read more about choosing the right firm in What to Look for in a Tax Relief Firm.

Can the IRS Reinstate Your Passport?

If your passport is revoked, resolving your tax debt is the only way to get it back. Options include:

1. Paying in Full

This clears the debt and removes restrictions.

2. Entering an Agreement

Setting up an installment plan or an offer in compromise can lift the travel restriction.

3. Appealing the Debt

If you believe the IRS made an error, you can contest the amount owed.

For more details on resolving state tax issues, check out this guide.

How to Check If You’re at Risk

If you’re worried about passport restrictions, start by reviewing your tax records. You can request a transcript directly from the IRS or use an online tax account. This will help you understand your total debt, including penalties and interest.

Once you know where you stand, take action to address any unpaid taxes. The IRS typically notifies you if your debt qualifies for passport restrictions. Acting before receiving this notice can prevent further complications.

The Risks of Ignoring IRS Notices

Ignoring IRS notices can escalate the situation quickly. Unpaid taxes can lead to wage garnishments, tax liens, or even legal actions. Passport restrictions are just one of many enforcement tools the IRS uses.

Delaying resolution also increases penalties and interest, making your debt harder to pay off. Tax professionals can help you respond to IRS notices and avoid further consequences. It’s better to act sooner rather than later.

Need help with tax debt? Visit Direct Tax Relief to learn how professionals can assist you.

Final Thoughts

The IRS passport law is a wake-up call for taxpayers. Owing over $50,000 can restrict your freedom to travel, but it doesn’t have to. With the right help, you can resolve your debt, protect your rights, and avoid these restrictions.

Direct Tax Relief offers affordable, professional assistance to help you navigate IRS challenges. Call today to get started on restoring your financial freedom.

The post New IRS Passport Law Limits Travel to Those in Tax Debt appeared first on Direct Tax Relief.

Notices Will Come Faster

With the recession, we saw tons of IRS layoffs. Since then, hiring requests have continued to be denied—until now. With the increase in staff will come an increase in follow-up (and probably not the good kind). Basically, this means that the IRS will be noticing tax debt much more quickly. If you owe back taxes and have been skating by, hoping your debt will go unnoticed, your luck has just run out.

Scrutiny Will Go Up

Now that the IRS will have more staff, they will also have more hands to review filings. What will this mean for small businesses? A lot more investigations. Made an error on your taxes in the past? That might come back to haunt you. Fudged the numbers on deductions? You’re at risk for a call. Basically, scrutiny will be in full force, so expect the number of audits, wage garnishments, and bank levies to rise rapidly.

Pursuit of Debtors Will Increase

As response time and scrutiny levels improve, it’s clear that the pursuit of those who owe back taxes will be emphasized.

The IRS has estimated that there is a $458 billion tax gap. A tax gap is basically the amount the IRS SHOULD have collected versus the amount they have actually received. With increased staff, the IRS will now be determined to start closing that gap. It might not be far-fetched to guess that part of this hiring spree is specifically for this purpose.

If you owe money to the IRS, don’t wait until you become a target. Work to resolve your tax debt today. If you owe back taxes on your income, contact Direct Tax Relief and learn about the IRS tax debt resolution programs including IRS payment programs and the Corona Virus Tax Relief. For example, the American Rescue Plan Act of 2021 introduced tax relief for individuals and employers.

Sources:

• https://www.wsj.com/articles/irs-to-hire-up-to-700-enforcement-workers-1462302623
• https://www.accountingtoday.com/news/irs-reports-an-increase-in-the-tax-gap

The post The IRS Is Hiring. If You Owe Back Taxes, Get Ready appeared first on Direct Tax Relief.

So what will this mean to those in debt to the IRS?

The Harassment Will Be Elevated

Gone are the days of IRS notices in the mail.

If you’ve ever gotten behind on a credit card or car loan payment, you absolutely know the lengths to which debt collection agencies will go to collect your debt. Plan for lots of calls, emails, and harassing letters. Debt collection agencies are even permitted to call your work (unless you tell them not to) and your friends and family if they are trying to locate you. That sort of contact is probably not the type of exposure you’re looking for, and it’s not something any of us previously had to worry about.

The IRS Response Will Be Faster

Because of job cuts over the last few years, the IRS has been slower to respond when taxes have gone unpaid. This doesn’t mean they haven’t noticed, and it doesn’t mean anyone’s debt has been wiped out, but the IRS response has typically taken some time.

That is about to change.

These debt agencies are funded through commissions on collected debts. Because of this, they are much more motivated to get your IRS tax debt paid. After all, the collection of your debt keeps them in business. And if you’re familiar with these agencies, you know they will go to great lengths to make that payment happen.

Identity Theft Still Won’t Be Addressed

We’ve all heard of the recent IRS identity theft scandals (and if you haven’t, check this out), and tax scams are also on the rise. These new collection agencies do nothing to combat either of these problems. In fact, many believe that involving a third party may only compound these problems. Either way, while involving debt agencies may increase federal funds, it will do little to protect taxpayers.

The Clock Is Ticking on Your IRS Tax Debt

Do you owe more than $10,000 in back taxes in your state or federal income? Contact Direct Tax Relief and learn about the IRS tax relief programs, including IRS payment programs and the Corona Virus Tax Relief.

Give Direct Tax Relief a call at 1-800-505-4134.

Sources:

• https://www.consumer.ftc.gov/articles/debt-collection-faqs
• http://www.acainternational.org/
• http://www.accountingtoday.com/news/tax-practice/saying-no-to-outside-agencies-in-tax-collections-77965-1.html

The post Have an IRS Tax Debt? Get Ready for the Collection Agencies appeared first on Direct Tax Relief.

But what if an extra three days aren’t enough?

To start, ask yourself: “Why can’t I get my taxes filed by the deadline?”

There are two common responses to this question:

1) “I am still waiting on a tax document/facing some other kind of difficulty that is preventing me from filing.”

If this is the case, then be sure to file an extension with the IRS.  An extension can give you extra time to receive and prepare pertinent tax documents. Just be sure to file the necessary paperwork by April 18 (the magic Tax Day deadline).

2) “I know I will owe taxes and I can’t afford to pay.”

If you are stalling to file because you are expecting a large tax bill, you are not alone. In fact, we’ve seen this again and again with high-profile celebrities (think Iggy Azalea, Wesley Snipes, and Nicolas Cage). Often, errors in accounting, bad advice or the unsteady income of someone who is self-employed or running their own business are to blame for large tax bills. However, the IRS isn’t concerned with the reason, they are focused on collecting the bill.

So what do I do if I can’t pay what I owe?

The worst thing you can possibly do is ignore the problem. The longer you let your taxes go unpaid, the larger that bill will grow (and it will grow rapidly). Instead of owing $10,000, you may be slapped with a tax bill five times (or more) that size.

If you’ve found yourself in a situation where you are living in fear of the IRS, give Direct Tax Relief a call immediately at 1-877-505-4829. Our tax attorneys can take over the fight for you and get your tax debt issues resolved once and for all.

The post Have You Heard? Tax Day Has Been Extended! appeared first on Direct Tax Relief.

The IRS reported that as of April 18, 2014, the IRS has received more than 131 million returns, of which 88 percent were e-filed. Of those 131 million returns 94,809,000 were due refunds (IR 2014-56).

“That means,” noted DTR’s senior enrolled agent and former IRS revenue officer Maurice Rosaler, “that over 36 million returns already filed this year with the IRS had balances due.”

“So here we already have 36 million taxpayers who owe for the tax year 2013,” pointed out Rosaler who was with the IRS for over eighteen years as a revenue officer and manager, “with another 12 million-plus applying for extensions (IR-2014-49, April 10, 2014). My experience has shown that many of taxpayers who file extensions expect to owe when they do file so that indicates millions more individuals and couples will end up owing back taxes for 2013.”

For instance pointed out DTR’s senior enrolled agent who has been doing tax resolution now for 27 years, in 2012 148,390,000 returns were filed with 110,470,000 due to refunds leaving 37,920,000 returns with balances due and tax year 2013 is on about the same pace.

“That means there are tens of millions of people,” continued Rosaler, “who is going to end up owing the IRS back taxes and don’t know what to do next. Yes, some can pay the balance off but the majority most likely cannot and many of those people will be anxious about what happens next and what their options are and what the IRS can do to them to collect on the delinquent tax.”

Most taxpayers don’t know that there are alternatives available to them if they can’t pay their taxes explained Rosaler.

“The IRS,” Rosaler went on, “is looking out for its best interest and basically wants full pay on the back tax as quickly as possible and does not go into the details of the other options available to taxpayers.”

Rosaler elaborated on some of those options available to taxpayers who have filed their returns but owe on the tax due including extensions to pay; various payment plans depending on the amount of the tax owed and the taxpayer’s financial status; reduction of the liability through penalty abatement; and settlement on the balance due for less than what is owed which is known as an Offer in Compromise.

“Most people don’t know the difference or their options,” said the senior enrolled agent, “and don’t know what to do to handle this crisis in their lives as owing the IRS back taxes is a crisis. This really is rather complicated and the best way to handle it is to get professional help by looking for and retaining a trusted tax relief firm with attorneys and enrolled agents who specialize in the field of tax resolution. The best way is to look for an authentic tax relief firm like Direct Tax Relief which is listed with the BBB with an A rating and zero complaints.”

“The other thing to remember,” Rosaler warned, “is that if you don’t address the issue of owing back taxes and make arrangements then the IRS can take collection action against you such as levy action including attaching your bank accounts or garnishing your wages as well as filing liens against you and your property.

“Tax professionals can help you avoid that,” the 27-year tax resolution veteran stated, “or if your case has already gone that far and the IRS has already levied you or filed liens a tax resolution expert like the ones here at DTR can help and get that garnishment or attachment released and the liens are withdrawn.”

“If you file your return,” concluded Rosaler, “and you owe and can’t pay remember you’re not alone. Last year almost 38 million others had the same problem and for 2013 the number is already at 36 million.

Don’t panic and then do get help from a tax professional. Keep in mind the IRS is looking out for the best interest of the government and you want to get someone to look out for your best interest.”

Direct Tax Relief has extensive experience as a tax debt resolution company and has represented numerous clients since 2007 providing professional legal tax advice to resolve tax matters including Offer in Compromise, levy and garnishment release, appeal penalties, and establishing minimal payment plans to the government.

Sources:

• https://www.irs.gov/newsroom/with-131-million-returns-filed-millions-of-amended-returns-expected
• https://www.irs.gov/pub/irs-news/IR-14-049.pdf
• https://www.irs.gov/newsroom/2012-end-of-year-filing-season-statistics

The post IRS Announces 131 Million Returns Already Filed This Season – 36 Million Owe Balances Due appeared first on Direct Tax Relief.