How to avoid serious IRS penalties

A Maryland resident who owes money to the IRS could lose the ability to leave the country. The IRS can ask the State Department to not issue a passport or to decline to renew an existing passport. Typically, the IRS will only do this if an individual owes $50,000 or more in back taxes or more than $50,000 after penalties and interest are accounted for.

It is important to note that the IRS will take multiple steps to resolve a tax debt before interfering with someone's ability to get a passport. Taxpayers have the ability to protest or otherwise dispute any proposed tax deficiency, and it may also be possible to take a case to the U.S. Tax Court. The goal is to keep the case open as that generally prevents an IRS decision from becoming final.

If a debt is considered valid, it may be possible to pay the amount due over time. As long as a taxpayer honors the terms of the deal, the debt won't be considered seriously delinquent. The IRS may also accept a compromise proposal and forgive some of the outstanding balance owed. It may also be possible to ask for innocent spouse status if the debt was a joint one.

Individuals who have an outstanding tax debt could face many sanctions for failing to pay it in a timely manner. In some cases, an individual could lose his or her ability to travel to other countries. Furthermore, the IRS may add penalties and interest to any amount owed, and the government may also place liens on property such as a house or bank account. An attorney may be able to help such a taxpayer obtain a favorable resolution.

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