Owing back taxes to the IRS threatens your finances and income. However, because of the FAST Act it can now put your ability to apply for or keep a passport in jeopardy. If you owe an IRS tax debt, you will benefit by learning if the FAST Act applies to you and how you can resolve your debt quickly to protect your passport.
What is the FAST Act?
The FAST Act stands for Fixing America's Surface Transportation Act and is a piece of legislation that President Obama signed into law in 2015. It requires that the State Department deny or revoke the passport of any American owing a tax debt totaling $51,000 or more. Since it was signed into law, the FAST Act has led to the State Department collecting the names of more than 362,000 taxpayers who have seriously delinquent tax debts.
This law was designed to encourage people who owe $51,000 or more in back taxes to the IRS to pay off their debts as quickly as possible. Since its inception, the law has helped the IRS collect more than $11 million in outstanding tax balances.
Even so, the law is not without its critics. Naysayers of the act argue that the IRS and State Department do not allow enough time for people to pay off or otherwise satisfy their tax debts after being notified in writing. Taxpayers only have 90 days from the time they learn of their tax debt delinquency to pay off their debts before they are denied a passport or have their passports revoked.
Still, the FAST Act does not apply to all taxpayers who have seriously delinquent IRS debts.
People who are excluded from passport denials or revocation include:
- Taxpayers who have active IRS installment agreements to pay off their back taxes
- People who have settled their debts with an Offer in Compromise or Justice Department agreement
- Individuals who are appealing tax levies through IRS due process hearings
- People who have requested Innocent Spouse Relief with Form 8857
The FAST Act also does not apply to taxpayers who:
- Are serving in combat zones
- Living in federally declared disaster areas
- Are going through bankruptcy proceedings
- Have tax debts in hardship non-collectible status
- Are victims of identity theft
Otherwise, taxpayers who are notified of having tax debts of $51,000 or more are advised to protect their passport status by immediately entering into an installment agreement with the IRS.
Passport Denial or Revocation
By law, the IRS must notify you in writing that you owe a tax balance of $51,000 or more. You will receive an IRS Notice CP 508C by regular mail.
This notification must be sent to you at the same time that the IRS notifies the State Department about your delinquent tax status. It will be sent to your last known mailing address.
After the IRS has notified you in writing of your seriously delinquent tax debt, you have 90 days to pay off or otherwise satisfy your account. The most direct way of satisfying what you owe to the IRS would be to pay off the balance in full if possible.
However, if you cannot pay off the debt, you can request an installment agreement, which would allow you to pay what you owe in monthly increments. The monthly payments will be based on how much you earn, ensuring that they will fit in your budget and be affordable. An installment agreement satisfies your tax debt and allows you to apply for or maintain your U.S. passport.
Once your tax debt is addressed satisfactorily, the IRS must then by law send you another notification, the Notice CP 508R, which advises you that your account is legally taken care of and that you can now apply for or use your passport.
This notification is also sent to taxpayers whose debts are no longer seriously delinquent or those whose tax debts were certified to be erroneous. The IRS has 30 days to send out this reversal notification to both you and the State Department.
A tax debt is considered to be no longer seriously delinquent or enforceable when:
- The IRS approves an installment agreement from the taxpayer
- The IRS accepts an Offer in Compromise to satisfy the debt
- Collection is suspended through an Innocent Spouse Relief request
- The taxpayer makes a timely request for a collection due process hearing regarding a tax levy
If these criteria apply to your particular tax situation, you will receive an IRS Notice CP 508R by regular mail to your last known mailing address.
Notification Prior to or During International Travel
If you receive the Notice CP 508C prior to international travel or when you are already abroad, you must immediately respond to it if you want to be approved for or maintain your current passport. You are advised to call the State Department telephone number that will be included with your notice.
You can continue to use your passport until you have been notified by the State Department that it has been revoked. If your passport has been revoked while you are traveling abroad, the State Department may issue you a limited and temporary passport so that you can fly directly to the U.S.
You can avoid having your passport denied or revoked by contacting the IRS by phone or online and requesting an installment agreement to satisfy your debt. If you are unsure of how to request an installment agreement or pursue other means to address what you owe to the IRS, you are encouraged to contact a tax professional. A tax professional can help you determine what method to use to pay off or otherwise take care of your tax obligation.
The FAST Act could jeopardize your ability to use your passport and travel internationally if you owe a seriously delinquent tax debt. You can avoid having your passport denied or revoked by immediately entering into an installment agreement with the IRS or by using other approved means to satisfy your IRS tax obligation.