Government can now seize taxpayers’ passports

A change in the tax code allows the government to rescind passports or deny initial and renewal applications for people owing more than $50,000 in taxes.

Finding out that a tax bill is more than a person is able to pay is one of the last things that people in Seattle, Washington, wish for. Fears about owing money to the government can cause great stress and leave people feeling very vulnerable. A new law that went into effect just a few months ago may only exacerbate such feelings for taxpayers.

Tax code amendment gives more power to government

Referred to as the Fast Act, Forbes explains that this law amended the tax code to give the government even greater power in the effort to collect outstanding tax debts. For starters, the State Department can block a person's ability to get a new passport or to renew a passport. It can even take a valid passport from a person who owes taxes to the Internal Revenue Service. The State Department would take such actions based upon information supplied to it by the IRS.

Additionally, the IRS has now been empowered to utilize private collectors when attempting to get people to pay back taxes. Many consumers and consumer groups are concerned about the government's ability to make use of private collectors. There are some situations in which private collectors cannot be used such as when a taxpayer is on active military duty in a combat situation or when an agreement has been made between a taxpayer and the IRS about how to satisfy a debt.

When passports may be in jeopardy

In order for the government to take a passport or block the obtaining or renewal of a passport, a person's full tax liability must be at least $50,000. This amount is not just based upon the taxes owed but can also include any related penalties or interest. Even if a person currently has an unpaid balance lower than this, caution is urged because interest and penalties can accrue quickly. A balance below $50,000 can easily surpass that amount faster than most taxpayers may think.

Options for people who owe back taxes

Despite the fear of owing money to the IRS, action is always better than inaction. This may involve requesting a payment plan or even contesting the amount owed with the IRS. Paying a tax bill with a credit card or even multiple credit cards is another option and can help people avoid the cost and other consequences associated with not having paid past tax bills.

When assessing the different ways to address a tax debt, Seattle residents are encouraged to talk to an attorney. Learning about the options and how each one may work is the best way to find the right solution.