The IRS is rapidly expanding one of the largest federal tax crackdowns of our lifetime. The tax travel ban program intends to deny or revoke the passports of more than half million people who, the IRS claims, owe more than $50,000 taxes. The strategy is allowed by law and the intent is apparently to prevent US residents who owe taxes from leaving the country and to prevent non-residents who owe taxes from entering the U.S. The first targets of this program are being notified by letter this month.
This blog post focuses simply on the strategies you should consider if you receive IRS notification that you are caught in this government sweep of indebted individuals.
- Get professional representation. In almost all cases it is a mistake to represent yourself in a collection matter before the IRS. My office and many other professional tax advisers are willing to offer a free consultation to discuss a strategy appropriate for your situation.
- Challenge the amount claimed. In many cases the total amount due that the IRS claims can be reduced by examining and challenging the assertions. This travel ban only applies to those with larger amounts of tax due, now set at $51,000 not including interest. If you can establish a balance of less than that amount then you are exempt from the travel ban.
- Work out a payment plan. Taxpayers who have established a valid payment plan are not restricted from holding passports.
- Establish temporary uncollectable status. In some cases it is possible to avoid the travel ban if you meet specific requirements that cause the IRS to classify your debt as uncollectible.
- Consider fast action. Apparently there is a lag time between receipt of the IRS letter and actual revocation of your passport. That time can be used to relocate permanently into or out of the U.S.