IF you owe more than $50,000 in delinquent taxes, penalties, and interest to the IRS, you are considered seriously delinquent. This puts your passport in jeopardy. Take action now before the State Department revokes or denies an application to renew your passport. Here are 10 tips to avoid passport problems:
1. Renew your passport now. Do not wait until its expiration date. Renew before you are referred to the State Department for passport seizure or renewal restriction.
2. Pay down your total liabilities to less than $50,000. You may owe taxes of $30,000 to $40,000 but penalties and interest can bring the total over $50,000 – right into the arms of this new seriously delinquent category. Be informed that once your tax debt is labeled “seriously delinquent,” paying it down to $49,999 will not get you out of this category. Sorry.
3. Get n nstallment Agreement. Submit an application to pay your tax debts in installments. Total taxes over $50,000 are not considered “seriously delinquent” if you have a current installment agreement.
4. Make an Offer In Compromise (OIC). An OIC is an offer to pay off a tax debt below its assessment level. For example, if you owe $100,000, the IRS may accept an offer of say $60,000 or so. If your offer is accepted, you are no longer “seriously delinquent.”
5. File for Collection Due Process (CDP). If you make a timely request for a Collection Due Process hearing in connection with a levy, you buy time to work out a deal with the IRS. In the meantime, you are not at risk of losing your passport.
6. Try Innocent Spouse Relief. If you filed a joint tax return with your spouse or ex-spouse who caused your huge tax liability, seek innocent spouse treatment.
7. Promptly respond to IRS notices. Do not ignore IRS notices. I have seen new clients come to me with unopened letters from the IRS. Open it and deal with it. If you don’t, you could miss a notice with a deadline such as a 30-day letter that requires a written response in 30 days. Prepare a protest, sign it and mail it before the end of 30 days to have a chance to resolve it at the Appeals office of the IRS.
8. If you receive a Notice of Deficiency, respond promptly. You have 90 days to file a petition. If you miss that window, you lose by default. Malo.
9. Request extensions to respond. Ask for extensions to buy time. Confirm in writing. Use certified mail.
10. Contact the IRS. Patience is a virtue. You’ll need it when you call these numbers:
• Individual taxpayers can call (800) 829-1040.
• Business taxpayers can call (800) 829-4933.
• If you’re overseas, call (267) 941-1000.
You can also go to www.irs.gov to view your tax account.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at firstname.lastname@example.org.