IRS to revoke 250,000 passports
Published at: 08/11/2018 01:52 pm
The US' tax authority, the IRS started to revoke citizenship and residency rights of at least a quarter of a million individuals, according to Dickinson Wright.
The "Fixing America's Surface Transportation Act" gave the power to the Internal Revenue Service to revoke passports from serious tax defaulters. The law was signed in 2015 but entered in force only February 2018. The objective of the IRS is to use this weapon against individuals, who owe more than 51,000 USD tax and penalties.
The surprisingly high number of affected people can still count with some safeguards. The first step of the process is that the taxpayer must receive either a Notice of Intent to Levy or a Notice of Federal Tax Lien. Upon receiving one of the notices, the taxpayer can appeal to a "Collection Due Process", which is a mediation phase to negotiate a legal solution for the debt.
Moreover, the IRS' process contains 30 days time to response, and they can start to revoke the passport only if the taxpayer does not answer "satisfactorily".
There is also a third stage to stop the IRS if the taxpayer agrees to pay the debt by offering a compromise or paying the debt in installments. When the tax authority grants the revocation, the State Department will not execute the order until 90 days after the grant, so the taxpayer still will have time to start paying.
According to step.org, Moodys Gartner from Canada is offering advice for those expats from the US, who prefer to renounce their passport without the help from the IRS.
What is not classified as a seriously delinquent tax debt?
According to 1040abroad it is important to know that the IRS doesn’t include a few tax debt in the seriously delinquent tax debt category.
The US tax authority will not revoke the passports of those taxpayers, who:
- Paid off a debt promptly under an installment agreement with the IRS.
- Paid off the money owing on time under an offer in compromise accepted by the Inland Revenue Service or a settlement agreement entered into with the Department of Justice.
- For which a collection due process hearing is timely requested in connection with a levy to gather the outstanding payment.
- For which collection has been suspended because a request for innocent spouse relief under IRC § 6015 has been made.