Tax Matters: Collection Update
Originally published in the Michigan Business Law Journal:
The IRS has announced several important changes to their collection policies. The passport restriction for certain unpaid taxes is now being implemented. IRS 7545 authorizes the IRS to certify to the U.S. Department of State that an individual has seriously delinquent tax debt that is unresolved (no installment agreement, pending OIC, etc.). If a taxpayer received Notice CP 508C, then the IRS has notified the Department of State. The Department of State may revoke a passport or deny the renewal or granting of a passport. The threshold for this procedure is $50,000, indexed for inflation, including penalty and interest. Reversal of the revocation will take at least 30 days. Taxpayers that travel overseas for business or pleasure have a significant motivation to proactively address their tax obligations.
The IRS has also recently announced that under most circumstances, taxpayers who owe less than $100,000 may establish installment agreements over seven years without detailed financial statements. Taxpayers must remain currently compliant with their tax payment and filing obligations during their payment plan.
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