REALLY? – Now the IRS Can Keep Me from a Vacation in the Bahamas?

by Tom Buck

Our government is really on a roll. The latest bit of chicanery showed up as part of the Fixing America’s Surface Transportation (FAST) Act. I’m not too sure what this has to do with the revoking of my passport, but such are the ways of our elected “statesmen and women”.

The IRS was given power under this Act, made official with the President’s signature just last month. Under this Act the Treasury (read IRS) can be authorized to “deny, revoke, or limit the passport of a taxpayer” with a tax debt in excess of $50,000. The law refers to debt this size as being a “seriously delinquent tax debt”.

In my experience, any new law, even if the writers are careful with their definitions and explanations (not necessarily a trait one would think of laying at the feet of our fearless representatives) is subject to some degree of interpretation before everyone agrees on how, when and where it should be applied.

That is the rub when it comes to this Act:
• Does the $50,000 include penalties and interest? Since there is no clarification, one would assume the IRS will say that it does.
• Does the $50,000 apply to ALL tax debt or for each year of tax debt? Again it is likely for the IRS to decide that ALL tax debt is included.
• Why would Congress want to restrict foreign travel? Are Americans with no criminal background (but having a tax debt) to be kept from travel to other countries? Does the government even have the right to deny this if it is my “right” as a citizen? Are they afraid a tax debtor will flee the country to avoid the debt?
• Perhaps the most important point – Will the IRS be allowed to act unilaterally, with no right to appeal? Will I lose my right to due process before my travel rights are taken away?
• If I get tagged with this loss of rights, what’s next? Being placed on a no fly list? Being refused the right to own a gun?

So what am I supposed to do if I get caught up in this circumstance and I need to travel using my passport? At present, unless or until someone comes up with another way, it appears that I will have to get on board with the IRS and arrange to deal with my bill.

And exactly how do I accomplish this? I arrange to liquidate the tax debt (pay it off, for Rush’s Loma Linda listeners) by making an installment agreement or making an Offer-In-Compromise (OIC).

The statute specifically indicates that the tax debt must be one for which a lien or levy notice has been issued, by certified mail (see two of my previous posts on liens and on levies). When I receive the notification, I immediately contact my tax pro (Buck, CPA llc in case you forgot who is giving you this valuable information) or prepare to do it myself.

In any event, I file a Collection Due Process (CDP) hearing request within the 30 days allowed by statute. (I do this on time because I remember being told before in this blog that the number one most important thing to remember about the IRS is to always open mail from them.) Now I will be provided the opportunity to negotiate a payoff method with the IRS and free up my passport.

The process of arranging one of these pay off methods could see me paying anything from zero up to the full amount of the tax debt depending on my financial situation at the time.

We have many clients who have a monthly installment payment amount of zero and the IRS has placed the account into non-collectible status. For numerous others we have submitted successful OICs in which the IRS agreed to accept pennies on the dollar.

Please understand that OICs are part science (we have to submit all of the information prescribed by the IRS) and part art (where we try to find to best solution for our clients based on over thirty years’ experience in successfully negotiating these OICs).

I reiterate my feelings about the work that I do in helping clients with IRS problems: This is how I get my jollies; this is what gives me satisfaction and makes me feel alive: this makes me feel that I am contributing to the peace of mind and well-being of others.

The IRS is a formidable opponent, but like all huge bureaucracies, they often don’t get it right. That is why I came up with our company motto: Defending our fellow citizens against their government by making sure the IRS obeys the rules. Let us hear from you if you need help and, please, pass the word along to others who might have an IRS problem.