Taxpayer Advocate argues for revised tax-related passport revocation process

An EU sign greets international travelers at a passport control checkpoint at Tegel Airport in Berlin, Germany (Voice of America News photo)

Many folks are taking one final quick vacation this long Labor Day weekend to mark the end of summer and beginning of the school year.

But some folks who are crossing international borders might find they're not welcome.

It has nothing, however, to do with the country they want to visit.

It's because of their passports have been revoked because they owe big tax bills.

How tax bills hamper travel: Since the December 2015 enactment of the federal Fixing America's Surface Transportation (FAST) Act, the Internal Revenue Service has been required to inform the State Department of taxpayers who owe substantial amounts.

The debt trigger is adjusted annually for inflation. For 2018, the figure is $51,000.

If you think you're OK because your tax bill is "just" $50,000 you might want to rethink your travel plans. The flagged dollar amount includes not just the past-due tax, but also penalties and interest.

Once State gets the notification, it denies these owing taxpayers' passport applications or renewals of current passports. In some cases, Uncle Sam may even revoke the travel documents.

Unhappy travelers, NTA: Folks who find their international excursions threatened by the tax-related passport action obviously are not happy.

Neither is National Taxpayer Advocate (NTA) Nina E. Olson.

Olson's not saying folks shouldn't pay the taxes they legally owe. But she doesn't like the way the passport-tax connection is being administered.

Specifically, she's upset that the IRS does not send notices of revocation to taxpayer representatives whose power of attorney is on file with agency.

Long-standing NTA issue: This isn't a new complaint from the NTA office. Last summer, Olson made no secret of her dissatisfaction with various elements of the unpaid tax/passport revocation process.

In her summer 2017 report to Congress, Olson expressed concern that IRS does not notify taxpayers of its intent to certify their tax debts as "seriously delinquent" until the certification is taking place.

Olson cited in that report what she believes is the questionable legality of failing to provide advance notice to taxpayers.

In addition, she pointed out that advance notice of a delinquent debt certification would make things better for everybody involved. Taxpayers, once notified that overdue taxes are about to lead to passport denial or revocation, tend to resolve their debts.

So if the IRS simply let the individuals and/or their authorized representatives know about the impending seriously delinquent tax bill certification, both the owing taxpayers and the federal government could be spared from the bureaucratic hassle of revoking and then reinstating a passport.

Hundreds lose travel papers: But since that isn't happening, despite Olson's earlier recommendations, folks who owe the U.S. Treasury continue to lose their passports.

Olson reported in a recent post on her NTA blog that as of Aug. 10, the Taxpayer Advocate Service (TAS) was working more than 700 cases where passport certification was a primary or secondary issue.

That number of big tax bill owing travelers is this week's By the Numbers figure.

Meanwhile, Olson says that her office will continue to work with the IRS on ways to expedite the passport certification process under current law, as well as explore what further steps can be taken to allow the passport certification and decertification notices to be sent to representatives where such disclosure is authorized under the law.

Clearing your tax debt: While Olson works on passport-tax matters from her post as an IRS watchdog, here's what you need to do if you owe the IRS and want to make sure you miss out on that once-in-a-lifetime European adventure.

You need to one of the following:

• Pay your tax debt in full.
• Set up an installment agreement with the IRS and make the payments as required.
• Make the IRS an offer in compromise that the agency will accept and then pay it.
• Pay the tax debt under the terms of a settlement agreement with the Department of Justice.
• Request or have a pending collection due process appeal with a levy.
• Have collection suspended because a you made an innocent spouse election or requested innocent spouse relief.

Good luck with that tax bill. And have fun abroad!

You also might find these items of interest:

• Have big tax bill? Your passport soon could be pulled
• House-passed FAA bill leaves existing excises taxes intact
• Attention global shoppers: duty-free goods not always fee free