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Recent Tax Law May Prevent U.S. Citizens Who Owe $50,000 or more in Federal Taxes from Traveling Overseas

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    As of late, the Trump Administration’s Middle-East travel restrictions have become a topic of everyday conversation and the source of much controversy. But a travel restriction that is already federal law is quietly being ramped up and could affect thousands of U.S. citizens.

    In 2015, Congress passed and President Obama signed into law H.R. 22, which added Section 7345 to the Internal Revenue Code. Entitled Revocation or Denial of Passport in Case of Certain Tax Delinquencies, Section 7345 uses Americans’ desire to travel around the globe as a way to ensure the timely payment of taxes owed to the IRS. Under the law, if the Commissioner makes a certification to the Secretary of the Treasury that a taxpayer has a “seriously delinquent tax debt”, the Secretary of the Treasury shall notify the Secretary of State of the debt and the appropriate action in relation to the denial, revocation, or limitation of the taxpayer’s passport will be taken.

    For the purposes of Section 7345, a “seriously delinquent tax debt” means an assessed tax of more than $50,000. Furthermore, the IRS must have filed a lien under Section 6323 or made a levy pursuant to Section 6331 with respect to the assessed tax.

    Section 7345 does not impose passport limitations, revocation, or denial for taxpayers who have paid their debt in full, have been granted innocent spouse relief, have entered into an installment or offer-in-compromise agreement with the IRS, or have filed a petition in U.S. tax court challenging the assessment that gives rise to the “seriously delinquent tax debt”.

    Taxpayers who are notified that they have been certified to the Secretary of State for having a seriously delinquent tax debt have the right to challenge such certification in court. The taxpayer who is subject of the certification may bring a civil action in either a U.S. District Court or the U.S. Tax Court. If the court determines that the certification is erroneous, the court will instruct the Secretary of State as such. Though, the action brought to challenge the certification should not be confused with a challenge of the merits of the underlying assessment by the IRS and can only be used to challenge to validity of the certification, itself.

    Recent updates to the IRS website indicate that certifications will begin in 2017. For those taxpayers who travel abroad for work or pleasure, Section 7345 may impede your ability to travel outside of the United States. Furthermore, if you are already outside of the U.S., you may be required to return due to your passport being revoked or limited. The best course of action to prevent the loss of your passport is to contact an experienced tax attorney as soon as possible. An experienced tax attorney can determine if you may be subject to Section 7345 and if so, how you can mitigate its effects. Potential strategies may be to file a petition that challenges an IRS assessment in U.S. Tax Court or to enter into an offer-in-compromise with the IRS. At no point do you want to be stuck without the right to travel.

    Contact an Experienced Tax Attorney Today

    The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers with delinquent taxes. With something as

    important as your ability to travel or visit family in another country on the line, hoping for the best may simply not cut it. An experienced tax attorney can assess your situation and develop an action plan to lessen the impacts of the government’s effort to restrict travel due to outstanding taxes. Don’t lose another night’s sleep over your tax debt. Contact the Tax Law Offices of David W. Klasing today for a reduced rate consultation.

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