News and updates
Revocation or Denial of Passport in Case of Certain Unpaid Taxes
If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS. Upon receiving certification, the State Department shall deny your passport application and/or may revoke your current passport. If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.
Seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt totaling more than $51,000 (including interest and penalties) for which a:
- Notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or
- Levy has been issued
The IRS will resolve cases by reversing a taxpayer’s certification within 30 days when the taxpayer no longer has a seriously delinquent tax debt. This can be achieved either through payment in full, payment plans or offers in compromise. Additional information can be obtained here. 2019-02-28
IRS web page lets you find out how much you owe
IRS is testing expanded criteria for streamlined installment agreements processing through September 30, 2017 9/28/16
Under existing criteria, approximately 90% of individual taxpayers with a balance due qualify to use the IRS’s Online Payment Agreement application.
During the test, expanded criteria for streamlined processing will be applied to installment agreement requests submitted to SB/SE Campus Collection Operations, including the Automated Collection System (ACS).
Expanded criteria will NOT be applied to installment agreement requests submitted to W&I Accounts Management, SB/SE Field Collection, or through the Online Payment Agreement application.
One expanded criterion being tested immediately is individual taxpayers with an assessed balance of tax, penalty and interest between $50,000 and $100,000 may experience accelerated processing of their installment agreement request if the taxpayers’ proposed monthly payment is the greater of their total assessed balance divided by 84 or the amount necessary to fully satisfy the liability by the Collection Statute Expiration Date.
Make an Online Payment Agreement.
If you owe $50,000 or less, you can apply for an installment agreement on line. You may choose to make convenient monthly direct debit payments for up to 72 months. With this option, there are no checks to write or send. And you won’t miss a payment or pay late. The best way to apply is to use the IRS Online Payment Agreement tool on IRS.gov. If you don’t have access to the Internet, you can apply by filing Form 9465, Installment Agreement Request.
The IRS can also help if your tax debt is more than $50,000 or you need more than six years to pay. In these cases, the IRS will ask for more financial information. See Form 433-A or Form 433-F, Collection Information Statement.
Determining How to Respond to IRS Collection
There are four steps in deciding how best to deal wi1h your tax problem:
Determining the extent of your tax problem.
This involves reviewing your tax returns, or preparing and filing returns if not yet filed, reviewing IRS audit reports, collection notices, transcripts and correspondence, and related items such as bankruptcy filings, to determine the amount of unpaid tax, penalties and interest.
Determining the “procedural posture” of your matter.
Has the IRS:
- requested returns be filed ?
- notified you of an audit ?
- proposed an assessment ?
- sent a notice of deficiency, and if so whether you responded by filing a Tax Court petition ?
- requested contact to discuss a balance ?
- filed a tax lien or issued a garnishment or levy, and if so, do you qualify for a collection due process appeal, etc. ?
Do you agree that the correct amount of tax was assessed ? If not, can you contest and correct the amount due, and do you have the documentation to do so ?
Do you have reasonable cause to request abatement of penalties ?
Is any immediate action is required, e.g., terminating a wage garnishment, or requesting subordination of a tax lien allow you to refinance your residence loan to achieve a lower interest rate or lower your monthly payments ? Or a discharge of property from the lien to allow you to sell your residence ?
When were the taxes assessed to determine when the statute of limitations on collections expires (taking into account any voluntary extension, or offer in compromise or bankruptcy), and whether you can discharge some all of your taxes in bankruptcy ?
“Assessment” is a tax term for when the IRS can maintain a tax is due and try to collect it. Until a tax is assessed the IRS can not try to collect it (except it may make “jeopardy assessments” E.g., if the IRS believes a taxpayer is about to leave the country making collection unlikely). Your filing a return is “self-assessment” and gives your consent for the IRS to assess the tax. The IRS cannot assess or collect tax until all procedural and appeal rights have been used, lapsed, or you agree to assessment.
Reviewing your financial information (form 433-A, and if applicable, 433-B) and other considerations.
Developing a plan to deal with your tax matter based on the above and available collection options, including:
Extension of time
Extension of time to pay taxes in full for up to 120 days [it appears the IRS has reduced the period to 60 days 8/28/12].
IRS Agenda – Vertical Classic
IR-2020-248, Nov. 2, 2020 – The IRS announced a number of changes designed to help struggling taxpayers impacted by COVID-19 more easily settle their tax debts with the IRS. [2020-12-11]
- Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days.
- The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
- The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
- To reduce burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
- Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
- Additionally, qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.
If your “reasonable and necessary living expenses” (as determined by the IRS under its collection standards) exceeds your cash flow, you will be placed in “uncollectible” status. Currently not collectible status does NOT resolve your tax problem, and only delays collection until your financial condition improves, or the statute of limitations on collections, below) expires.
Installment payments payable monthly equal to the amount by which your money available to live on in exceeds your “reasonable and necessary” living expenses. This may pay the taxes in full or the IRS may enter into a partial payment agreement.
Bankruptcy may discharge certain income taxes (not employment, trust fund or sales tax) where the return was filed, and the due date (typically April 15 of the following year) is more than 3 years before the filing of the bankruptcy petition.
The expiration of Statute of limitations results in the taxes becoming uncollectible.
The IRS may accept an offer in compromise and settle for less than full payment.