Ignoring Your IRS Tax Debt Can Have Unintended Consequences!

A new law allows the IRS to sieze your passport if you owe the IRS $50,000 or more.

The IRS can cancel your passport by proposing that you owe $50,000 or more without giving you a chance to dispute it.  This seems unconstitutional since it infers you owe the money when, in fact, it could be a mistake on the part of the IRS.  This infers a guilty until proven innocent approach.

The IRS expects to raise $398 million over ten years using these new powers.  That figure seems a bit ambitious to me.

It would be unreasonable to enforce this new law if the taxpayer had an installment agreement in place and was making payments.  So you would think that the IRS would only enforce it against a taxpayer without a current payment plan in place.

One suggestion, if the amount owed were not too much greater than $50,000, would be to pay the balance down just below $50,000 and request a streamlined payment plan.  This way you can travel freely and not have to complete an IRS Collection Statement.

Ignoring your tax debt to Uncle Sam can have other unintended consequences such as having a tax lien filed against you and hurting your credit score.  This new IRS power is another example of why not to ignore your tax debt.  That is, if you truly have one!