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Amid the Trump passport flap, here’s how to keep the IRS from taking yours

Whether the FBI took former President Trump’s passports—and if so why—is a story in itself and part of a larger story that won’t let go. There was controversy over whether the FBI had taken the passports and, if so, whether by mistake or on purpose. In the end, the Department of Justice confirmed the passports were Taken by FBI agents, but now returned. The media and public also had opinions, with some saying Trump had labeled him a ‘flight’ risk, others saying the FBI had gone too far. Any way you slice it, the search warrant and its aftermath may prompt some Americans to think about their rights and His own Passport can be taken. Criminal defendants are often required to surrender their passports as part of bail agreements and other circumstances, but Americans may be wondering when the government can take your passport. The IRS is an agency that the State Department has influence over not issuing or renewing. The IRS periodically reminds taxpayers that they may not be able to renew their passports or obtain a new one if they owe $55,000 or more in federal taxes. The controversial law dates back to 2015, and in January 2018, the IRS began implementing new procedures for individuals with “serious delinquent tax debts.” It works like this. If you seriously owe a tax debt, the IRS can notify the State Department. The State Department typically does not issue or renew a passport after receiving certification from the IRS. The IRS cannot take it Your passport is accurate, but it can tell the State Department to do so.

This law can be debated as a good thing, but Congress thinks – it is not even an executive order. The change in law came in the Fixing America’s Surface Transportation (FAST) Act, adding Section 7345 to the tax code. It’s not limited to criminal tax cases, or even cases where the IRS thinks you’re trying to evade. The idea was proposed in 2012 and rejected. But in late 2015, Congress passed it and President Obama signed it. Here are the steps you can take to get hold of your passport:

1. Don’t be a ‘serious offender’. Serious delinquency tax debt is a key term. If you don’t have one, your passport is safe. So if you’re committed, keep your debt below $55,000. But it involves penalties and interest, so be careful. A $20,000 tax credit can eventually grow to $55,000. And be careful, once your tax debt is labeled ‘seriously delinquent’, paying it off at $54,999 might not help. IRS No Return the certification because the taxpayer owes less than $55,000.

2. Continue your dispute with the IRS. You can usually contest tax bills if you do it quickly. The IRS usually sends multiple notices for any tax debt and you must respond. Explain why the IRS is wrong and continue to protest. If you receive an IRS notice of a proposed deficiency or examination report, respond. This is sometimes called a “30-day letter” because there is a deadline for response. Prepare a protest, sign and mail it before the deadline. Keep a copy, and proof of mailing, preferably certified mail. Usually a protest will land you in the IRS appeals office, where you’ll have another chance to resolve it.

3. Go to Tax Court. If you fail to protest or if you do not resolve your case in IRS appeals, you will likely receive a notice of deficiency. The IRS notice of deficiency comes by certified mail. This is often called a “90-day letter” because you have 90 days to respond. Only one response to a Notice of Deficiency is permitted: Filing a Tax Court Petition in the Office of the Clerk of the US Tax Court in Washington, DC US Tax Court can’t Have your case heard if you miss the 90-day deadline. You want to pursue your tax dispute so the tax debt doesn’t become final.

4. Get extensions. You can sometimes get extensions from the IRS, so keep communicating. For many notices, the IRS extends the time to respond. In some cases, however, they cannot. For example, when you receive a notice of deficiency (a 90-day letter), you must file in Tax Court within 90 days and this date cannot be extended. Most other instructions are less strict. If you ask for an extension, confirm it in writing. In fact, confirm everything you do with the IRS in writing.

5. Communicate with the IRS. If you receive a certification that your debt is ‘seriously delinquent’ contact the phone number listed in the IRS notice. If you have already paid the tax debt, send the proof to the address given in the notice.

6. Prove that your passport is required. If you need your US passport to keep your job, after your seriously delinquent tax debt is certified, you must pay the balance in full or make an alternative payment arrangement to keep your passport. Once you resolve your tax issue with the IRS, the IRS will return the certification within 30 days of resolving the issue.

7. Agree to pay in installments. Getting an installment agreement with the IRS to pay off your tax debt over time isn’t too difficult. If you sign one, stick to its terms. Even if your debt is huge, the IRS won’t call it ‘serious delinquency’ if you’re paying the installments on time.

8. An offer in compromise or settlement. You can also try this route to settle with the IRS. If the IRS accepts an offer in compromise to satisfy the debt, the balance may be forgiven. In some cases, the Department of Justice may enter into a settlement agreement to satisfy the tax debt.

9. Innocent Spouse Relief. If the tax debt belongs to your spouse and you are saddled with it due to joint tax returns, you may be eligible for innocent spouse treatment. This is a separate topic and the rules are more complex than you might think. See IRS Tax Topic 205, Innocent Spouse Relief. However, it’s worth noting that the IRS can suspend collection efforts if you claim innocent spouse relief (under IRC Section 6015).

10. Causal process. There are many taxpayer protections when it comes to IRS collections. One set of protections are due process inquiries. If you make a timely request for a collection hearing regarding a levy to collect a debt, you can at least buy time to reach an agreement with the IRS. See Taxpayer Advocate 2016 Annual Report to Congress, Appeals from Collection Due Process Hearings under IRC §§ 6320 and 6330.

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