Here is
something you don’t see every day:
There is a section
in the tax Code that can affect your passport. It entered the tax law in 2015,
and it allows the IRS to notify the State Department if you have a seriously delinquent
tax debt.
How much tax
debt are we talking about?
Around
$52,000.
As a career
tax CPA, I do not consider $52,000 enough to hold-up someone’s passport.
Granted, my perspective is a bit skewed, as average folk (like you or me) are
not likely to require my services, at least not on a repetitive basis. Still, I
have had friends and acquaintances who have danced the tax tango near or above $52
grand, so I know that average folks can get there.
If the IRS
notifies the State Department, the law requires them to deny your passport
application or renewal.
That will put
a chill on your travel plans.
How do you
get out of this predicament?
As a generalization,
the IRS does not want to chase you down. They certainly do not want to seize
your assets or bounce your passport. What they want is your money.
I do not immediately
know Derrick Tartt’s issue with the IRS, but I can tell you that it has gone
cold. If his issue was still being handled – in Appeals, Tax Court, a payment plan or whatnot – this should not have happened. I will not say “would not,” as I
have been in practice long enough to see too many “would nots” land on my desk.
How should
Mr. Tartt handle this?
He is going
to have to move his file from cold to warm. This may mean writing a check or entering
a payment plan.
That presumes
he owes the tax.
What if he disagrees
that he owes the tax, or at least disagrees that he owes all of it?
The
situation becomes trickier. His file has moved to Collections, and that crowd
does not care whether you owe or not. Their only concern is prying money from
you.
Am I being
unfair?
Let me give
you an story. We have a client who got himself into a tax hole a few years
ago. He has been working his way out, and he was very optimistic that his 2018
return would have a large enough refund to pay off the back taxes, interest and
penalties. He was partially correct, as he did have a refund, but it was not
enough for payoff in full. It did however put him close enough that he could
write a check for the balance.
I called
Collections to hold back the hounds. I requested that the refund be applied (which
would happen automatically, but I wanted to talk to them) and requested a bit
more time for the balance, as he is presently battling a second round of prostate
cancer. His attention is … shall we say … elsewhere, understandably.
Understandable
for you or me, but not for Collections. One would have to wheel in the Gran
Telescopio Canarias telescope to find empathy in that universe. I may as well have
been speaking with Arthur Fleck.
If Mr. Tartt
disagrees that he owes tax (or some of it), his advisor will have to reopen his
file. There may be several possibilities, depending on the facts and the amount
of time lapsed, and he should seek professional advice.
That will
not happen fast enough to get Mr. Tartt to the Dominican Republic or Cayman
Islands in the near future, however.
I hope it
works out for Mr. Tartt.
