The IRS and New York State Department of Taxation and Finance possess an array of measures to motivate taxpayers to pay overdue amounts. One might strike readers as familiar, the other downright shocking.

Taxpayers may not be able to renew a current passport or obtain a new one if they owe a certain amount of federal taxes. According to the Fixing America’s Surface Transportation (FAST) Act, signed into law in 2015, the IRS is required to notify the State Department of those with “seriously delinquent tax debts,” which is $52,000 or more (in back taxes, penalties, and interest for which the IRS has filed a Notice of Federal Tax Lien, and for which the period of challenge has expired), and certify them for passport revocation. There are exceptions for innocent spouses and taxpayers on active duty in combat zones, as well as those meeting payment obligation under an installment agreement or offer in compromise.

When the IRS so certifies a taxpayer to the State Department, he or she receives a Notice CP508C. When that person no longer has a seriously delinquent tax debt, because they paid it in full or made another arrangement, the IRS will then reverse that certification.

The New York State Department of Taxation is permitted to recommend the suspension of a New York state driver’s license if a taxpayer has at least $10,000 in past-due tax debt. An exemption from suspension is possible if the person holds a commercial driver’s license, pays court ordered child support and or spousal support, or receives public assistance or Supplemental Security Income.

Before a taxpayer is recommended for such an enforcement action, New York State is required to send a Notice of Proposed Driver’s License Suspension, which grants her or him 60 days to resolve the issue.
Needless to say, passport revocation and driver’s license suspension can create severe challenges for those already struggling to address delinquent federal and state tax obligations. If a reader is in this situation, it is vital to contact a qualified tax professional to work out a plan to protect the privileges of traveling and driving an automobile.

Nicole Spread

Walter Daszkowski, CPA, PFS
Daszkowski, Tompkins, Weg & Carbonella CPA, P.C. 1303 Clove Road, Staten Island T: 718.981.9600 Option 1 / F: 718.981.9601 278 Route 34, Suite 1 & 2, Matawan, NJ