Okay, you just got off the phone with your favorite bookie, I mean travel agent. You’ve booked that long overdue trip of a lifetime. 30 countries, 45 cities and the best food on the planet.
Now, you can hardly wait to tell your spouse about your impending fanciful, whimsical life altering vacation. As you gleefully reveal all the glorious details, your spouse suddenly interrupts you, lovingly but with purpose, and states, “I guess this means we need to update our passports!” Your moment of glee suddenly changes the metaphoric lanes and makes a sharp right turn into the panic lane. “Oh my god,” you scream, “how in the hell do we do that?” Answer, as all knowledge seekers know, GOOGLE it. To your extreme relief, the process can be handled online, no problem. Great!!!!!!
OOPS! HOUSTON, WE HAVE A PROBLEM.
As you scroll down the various results, you stumble upon a listing titled “IRC code section 7345.” Curiosity gets the better of you and you decide to read a bit further. You discover that this section authorizes the IRS to certify lists of seriously delinquent taxpayers and send those lists to the State Department. Those are the lovely folk who control who may and may NOT receive a passport. Basically, this allows the Secretary of State to refuse or revoke the issuance of a passport. You say to yourself, “I am good to go.” Then you remember that a few weeks ago you received a CP2000 from the IRS regarding your 2020 tax return. In that notice, the IRS suggests (yes, it is not an assessment just yet), that you owe them $275,452.65. You also vaguely remember that once you opened that notice, you thought it best to ignore it because you know that you did not make that much money in 2020, little alone owe that much in taxes and therefore the IRS must have gotten it wrong.
Edwards v. California, 314 U.S. 160 (1941)
Believe or not, this cornucopia of impending doom actually involves the 5th and 14th Amendments to the U.S. Constitution. As a result of these two, one of the many rights you enjoy is the right to travel freely between the states. The above-mentioned case is from California. In 1941, California passed a law which restricted a resident from bringing an indigent person into the state from another state. This law was ultimately struck down by the courts thus ensuring free movement between states. The court noted “the Republic would have constituted little more than a league of States; it would not have constituted the Union which now exists.”
IF I TELL MY SPOUSE, SHE WILL KILL ME. WHAT IS A LONELY TAXPAYER TO DO?
Okay, so I get to freely move from Maine to Vermont (not sure why and is there a difference?), however, there are no cases holding or implying that the right to travel overseas is a fundamental right protected in a similar manner as from state to state. So, back to the issue at hand. Let’s assume the taxpayer has ignored the situation long enough for the IRS to issue a final notice of balance due along with the ever nasty Notice Of Federal Tax Lien (NFTL). If the IRS follows procedure, they will certify to the State Department that the taxpayer has a tax balance due greater than $50,000. In turn the State Department may withdraw or refuse to issue a passport. So far, it looks like this guy’s plans just got dumped.
AND THE FINAL JEOPARDY ANSWER IS:
As I have written in previous blogs, never ignore a notice from the IRS. To solve this problem, the taxpayer needs to either:
- Payoff the balance due
- Resolve the issue and correct it
- Get on a payment plan, or
- Take the matter to court.
Lesson here is if the IRS says you owe them more than $50,000 don’t plan any overseas trips, but hey, at least you can move freely about the country!
Gary Weiss
Gary is a graduate of the Marshall School of the University of Southern California. He founded and operates a boutique accounting firm dedicated to bringing high - quality tax preparation, tax planning and tax resolution services to individuals, small businesses, small nonprofits, family owned businesses and start-ups, at an extremely affordable price. Visit Gary Weiss CPA.