Those with tax debt may have trouble traveling abroad

Creating the Foreign Account Tax Compliance Act (FATCA) is among a series of steps that the government has taken to close the international tax gap. This gap is the difference between what the IRS takes in each year from overseas filers compared to what it is owed. However, Maryland residents and others who live or travel internationally may face passport restrictions for not paying taxes or filing tax returns in a timely manner.

Generally speaking, these restrictions would only impact those who don't have an arrangement with the IRS to pay their back taxes. It is also likely to impact only those who have a seriously delinquent tax debt. The IRS considers a debt to be seriously delinquent if a person owes more than $50,000 in assessed taxes. Furthermore, a lien must have been filed and a levy issued against the taxpayer.

In addition to revoking or limiting a passport, it may be possible for the State Department to deny an application to obtain a new passport. The State Department will receive a list from the IRS of all taxpayers deemed to have a seriously delinquent tax debt. Taxpayers who are on that list will receive a notice, and they will be given an opportunity to resolve the matter before losing travel privileges.

Those who owe back taxes may face financial and other penalties. These penalties may include interest and fees added to the balance owed as well as liens placed on homes or other property. However, these penalties may be waived or reduced if an individual makes a good faith effort to pay the IRS in a timely manner. An attorney may be able to help a client work with the government in an effort to resolve a tax matter in a favorable manner.

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