Hello my friends.
By the time you see this, Ali and I will be starting the last day of our cruise. Then it will be on to San Fransisco, a city that I have never visited. I am looking forward to visiting the Wharf, Chinatown and riding the trolley
I usually try not to get tax technical in these emails. But I would be remiss if I do not tell you something that you or someone you may know may find interesting. As I watched all the travelers showing their identification papers, it reminded me of a situation that taxpayers could potentially find themselves in.
You should know that the IRS has many tools and weapons in their arsenal to get taxpayers to report the correct tax and collect that tax. I will not get into all these, but I need to point out a fact that many are not aware of that came about with the passage of the 2015 Fixing America’s Surface Transportation (FAST) Act (huh? exactly!).
This law allows for the IRS to certify to the various Secretary of States a taxpayer’s significant delinquent tax debt in order to deny the application of a new passport, deny the renewal of an existing passport or revoke the existing one.
So what does significant mean? Like a lot of the rules in collections of IRS debt, there are many levels, from $10,000 or less, to $25,000 or less, to $50,000 or less and $50,000 or more. These levels determine what the taxpayer can do and what the IRS will allow.
When it comes to the provision of the FAST law, a new level was enacted: $51,000 or more. So, if a taxpayer owes $51,000 or more and a notice of federal tax lien was issued, their passports can be revoked.
If you or anyone you know has “seriously delinquent tax debts” as described above, they need to be wary. Let me relay a story of what happened about 6 months ago. A potential client, who owed about $72,000, came in to see me. We went over their options, including the passport issue.
I pointed out that when they receive the Notice of Federal Tax Lien, there will be a part that will include details about the revocation of their passport. They were more concerned about the lien as they had no plans on traveling anywhere where a passport is needed. They took no heed and did nothing.
A few weeks later they now owe $75,000 (due to additional interest). They received the notice of federal tax lien and then, soon after, the notice of the revocation of their passport. Now, they want to go on a trip to Australia next month, which was paid for (and non-refundable) and they cannot. Panic is now in full force.
My point is, that taxpayers have collection alternatives. Not everything we try is guaranteed. However, I do not take a case unless I believe it has a reasonable chance of success and the client knows it from the beginning. Because of this, I have lost many potential clients.
Anyway, if you know of anyone in this situation, have them call me for a consultation.
Oh, by the way, what happened to the client discussed above? We applied for and received, an offer in compromise, where they are making the required monthly payments. As such, I filed for an expedited (very restrictive) and received a decertification of the passport revocation recently.
A win-win for the taxpayer. This could true for you or someone you know. Spread the word.
So until next time,
Jeffrey “Let’s keep those passports active” Schneider