It’s essential to keep your clients informed about critical tax-related issues that may directly impact their lives. One such matter that’s gaining attention is the IRS Passport Hold, which could restrict your clients’ ability to travel internationally. In this comprehensive guide, we will delve into the intricacies of the IRS Passport Hold, how it can affect taxpayers, and what steps you can take to help your clients avoid or resolve this potentially challenging situation. Stay ahead of the curve by learning about the latest updates and best practices to keep your clients informed and their passports clear of any IRS-related holds.
Do you have tax-delinquent clients with travel plans? Do them a favor and give them a quick heads-up. The IRS has a message for them:
If they are seriously behind, and they want to hold on to their passports, the IRS is strongly encouraging them to pay up or enter payment agreements as soon as possible.
Here’s What’s Going On
In January, the IRS began implementing new procedures of the Fixing America’s Surface Transportation (FAST) Act. The FAST Act, which requires the IRS to notify the State Department of seriously delinquent tax debt, was signed into law in December of 2015. It requires the State Department to deny or revoke the passports of taxpayers falling into this category.
Are All Taxpayers with Tax Debts Affected?
Only those taxpayers with seriously delinquent tax debt will be affected. A passport won’t be at risk under this program for any taxpayer:
- Who is in bankruptcy
- Who is identified by the IRS as a victim of tax-related identity theft
- Whose account the IRS has determined is currently not collectible due to hardship
- Who is located within a federally declared disaster area
- Who has a request pending with the IRS for an installment agreement
- Who has a pending offer in compromise with the IRS
- Who has an IRS accepted adjustment that will satisfy the debt in full
If a taxpayer serving in a combat zone owes a seriously delinquent tax debt, the IRS also postpones notifying the State Department. The individual’s passport is not subject to denial during this time.
What Qualifies as a Seriously Delinquent Tax Debt?
Seriously delinquent tax debt refers to those taxpayers who owe the IRS more than $51,000 in back taxes, penalties and interest combined.
Are There Any Other Stipulations?
Yes. In addition to the tax debt, the IRS must also have filed a Notice of Federal Tax Lien (NFTL) and the period to challenge it must have expired or the IRS must have issued a levy.
So, is there no hope for your clients with seriously delinquent tax debt?
There’s always hope—well, in this case anyway….
There are ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. Here are just a few:
- They can pull out their checkbooks and pay their tax debts in full.
- They can set up IRS-approved installment agreements and make payments.
- They can work within the guidelines of a settlement agreement with the Department of Justice (DOJ).
Oh yes, the dreaded OIC.
As a tax professional, you can offer your clients relief by working with them to set up an accepted offer in compromise.
The thought of that used to make us cringe, too—hours on hold with the IRS and piles of paperwork—until we created a system that runs as smoothly and efficiently as a well-oiled machine.
IRS Solutions Software Can Solve the OIC in 1-2-3:
That’s the good news. The BETTER news is we have developed a way to share it with you. As an IRS Software Solutions member, you simply enter your clients’ data and our software analyzes what they qualify for and then does the rest.
Whether an OIC, installment agreement or currently uncollectable, our software figures it out for you, saving you time. The client gets their answer and you can still bill for the service; improving your bottom line.
Members Only Benefits:
IRS Software Solutions gives you the confidence to provide services you may have been uncomfortable with in the past. Another benefit of membership is the training you get on our monthly case study calls.
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