It’s time to think FAST. The Fixing America’s Surface Transportation Act, that is. In March, the FACT Act came into effect, seeking to remedy the IRS’s situation with unpaid federal taxes, as well as interest and penalties. The FAST Act applies to those with taxes owed in excess of $50,000—otherwise known as “seriously delinquent taxpayers”— with liens and levies. Such a tax debt has its consequences now under FAST.
Should a taxpayer fall under the “seriously delinquent” status, and then the State Department can take action once the IRS certifies the delinquency. While the IRS has yet to offer any firm regulations under FAST, it is noted that the State Department can regulate the passport usage of the taxpayer in question. That includes denying a passport application, limiting usage, or completely revoking usage. An application for a new passport can also be held for 90 days while the taxpayer sorts the debt. This all can happen immediately, once a written IRS certification is sent to the State Department. Notably, the debt will not be certified if the taxpayer has a payment plan in place. While it’s clear that this can affect any pleasure or business travel internationally, it can also affect domestic travel starting next January.
On January 22, 2018, the Real ID Act goes into effect, which impacts domestic travel. Under this Act, domestic airlines can only accept certain state driver’s licenses that are compliant. Here are the states so far. For those non-compliant, a passport must be used, thereby causing disruptions in travel if a taxpayer is in serious delinquent debt and cannot use his/her passport.
It’s certainly a red flag for anyone wanting to travel. However, employers must be aware of this as well for themselves and their employees who travel for business. It is best to consult an attorney who can work with the taxpayer to determine the validity of the debt and how to move forward.