Do you have travel plans? Heads-up, Ken Collis of the Los Angeles based firm, TLK Fusion Marketing has some information that you should know!
The IRS may have a message for you.
If you are seriously behind in your taxes, pay your bill ASAP. The IRS is strongly encouraging you to clear up your debt immediately up or enter payment agreements if you want to hang onto your passport.
Seriously? What’s Going On?
Last January, the IRS put new procedures of the Fixing America’s Surface Transportation (FAST) Act in motion. Never heard of it?
The FAST Act requires the IRS to notify the State Department of seriously delinquent tax debt. It was signed into law in 2015. It requires the State Department to deny or revoke the passports of taxpayers who owe back taxes.
Oh, oh. Are you behind in paying taxes? How do you know if you’re going to be affected by this change? You might be able to relax, depending on whether or not you fit the profile of those at whom action is being directed.
Before we get into that, let’s talk about something far more critical. In fact it won’t matter if you lose your passport because you might be going to prison for tax fraud.
But if you’re committing tax fraud, losing your passport will be the least of your worries, according to TLK Fusion Marketing.
What is Income Tax Fraud?
Income tax fraud is basically tax evasion. When you willfully attempt to defraud the IRS, you’re messing with the wrong guys. Just in case you’re not sure…
You are committing tax fraud if you:
- Intentionally “forget” to file a tax return
- Fail to pay your taxes
- Fail to report all of your income
- Lie to the IRS
- Prepare a false tax return
Are You Paid Mostly in Cash?
Employees have a paper trail of tax stubs and W-2 forms to mark their activity. Self employed people without a paper trail and service workers paid in cash do not. They have been identified as committing the most tax fraud. Why do you think that is?
Well, frankly because it’s easy to underreport cash income. Especially if you own a retail sales store, a restaurant, or you’re a hairdresser. Income can’t be proved unless you get a 1099.
Mechanics, handypeople, massage therapists, and servers commonly underreport income.
“If you are convicted of tax fraud, it’s a felony,” warns Ken Collis. “You may be subject to fees and/or imprisonment.”
Something to remember before you run two sets of books.
Okay, enough about fraud. Back to the FAST form and your passport.
Not All Taxpayers with Tax Debts Affected!
If you’re a taxpayer (or tax evader) with seriously delinquent tax debt you have reason to be concerned. However, don’t start packing and planning to leave the country yet. Your passport is not at risk under this program in the following cases:
- If you’re in bankruptcy
- If you’ve been identified by the IRS as a victim of tax-related identity theft
- If the IRS has determined your account is currently not collectible due to hardship
- If, like many Americans after recent hurricanes and fires, you’re located within a federally declared disaster area
- If your request is pending with the IRS for an installment agreement
- If you’re working with a tax pro on a pending offer in compromise (OIC) with the IRS (read on for more info about this)
- If the IRS accepted an adjustment on your behalf that will satisfy your debt in full
What About Military Service?
At ease, soldier. If you’re serving in a combat zone and you owe a seriously delinquent tax debt, the IRS will postpone notifying the State Department of your delinquency. Your passport is not subject to denial during this time.
So, there are probably several definitions of seriously delinquent, right? Seriously delinquent tax debt refers to who those who owe the IRS more than $51,000. That figure would include back taxes, penalties and interest.
If you’re starting to squirm, there’s hope!
In addition to the tax debt, the IRS must also have filed a Notice of Federal Tax Lien (NFTL) and the period to challenge it must have expired or the IRS must have issued a levy.
You can avoid having the IRS notify the State Department of your delinquent tax debt if you pay your tax debt in full, or set up IRS-approved installment agreements and make payments.
You can also work within the guidelines of a settlement agreement with the Department of Justice.
Ask Your Tax Advisor about an Offer in Compromise
“Before you break a sweat thinking about the ramification of overdue taxes, says Ken Collis, “as long as you were never accused of committing tax fraud, your tax advisor might be able to offer relief by working with you to set up an accepted Offer in Compromise (OIC).
Don’t cancel your cruise to Bali yet. And don’t procrastinate, TLK Fusion Marketing Advises. Call your tax pro and get yourself off the radar of the IRS.
