The Internal Revenue Service (IRS) recently published a reminder that tax debt can curb travel ambitions. A failure to pay off one’s bill with the IRS can result in problems with your passport.
How is the IRS making sure tax debt is paid? The agency has taken an aggressive approach when it comes to tax debt and passport applications. Simply put: fail to pay our tax obligations and the IRS can take away your passport.
How common is this tactic? The IRS regularly uses this method. Some projections estimate 362,000 taxpayers will have a denied initial application or renewed passport in 2018 if they do not pay off their tax obligations.
What if I cannot pay my tax bill? This is just one of the many tools the IRS uses to encourage taxpayers to pay off their tax debt. Those that are struggling to meet this obligation have options. Depending on the details of the situation, the following could help:
- Installment agreement. This option results in the taxpayer paying off his or her tax obligation in smaller payments over a period of time. This period of time is generally set to five years or less.
- Offer in compromise. This agreement essentially involves the taxpayer establishing that he or she can only pay off a portion of the debt. The taxpayer would provide evidence to support this contention. The IRS would receive a portion of the tax owed and forgive the remaining balance.
An attorney can review your tax obligations and provide counsel on the best way to come into compliance with applicable tax laws.