December 10, 2015
On Dec. 4, 2015, President Obama signed into law the Fixing America's Surface Transportation Act (FAST Act). It is the first highway bill in more than 10 years to be classified as "long-term."
Similar to the shorter term 2015 Highway Bill that preceded the FAST Act, there are tax-related provisions in the FAST Act that don't have a lot of connection with the topic of the legislation, but are still traveling with the legislation to secure their enactment.
Two notable tax items in the FAST Act are both related to the collection of old tax debts. One authorizing the use of private qualified tax collector contracts by the Internal Revenue Service and the other limiting, denying or revoking the U.S. passport for those with a seriously delinquent tax debt.
Debt Collection Changes
Just a few months ago, legislation was passed to allow tax collection contact to be made using the cell phone number of a taxpayer. Now, combined with the ability of the IRS to contract with outside private debt collectors, the IRS is looking to monetize what are classified as inactive tax receivables. These will be the accounts that the IRS has taken out of active inventory for lack of resources to pursue collection, or they just can't locate the taxpayer, and that also have a shorter statute of limitations period for collection. Exceptions, such as pending agreements, examinations, litigation, criminal investigations and other usual circumstances, will be available to be applied to prevent the new collectors from being successful.
Be Wary of Imposter Calls
The effective date for the use of the private debt collectors was Dec. 4, the date of enactment of the FAST Act, and will apply to any tax receivable identified as qualified after the date of enactment. The IRS will be establishing guidance for how the new private debt collectors will operate, but with the increase in taxpayer identity cases and tax fraud running faster than the time it took to come up with over 1,300 pages in the FAST Act, this new private collection effort will be ripe for impostor collection calls, so if you get a private collector tax receivable call, be sure you know who you are talking with before you give out private information.
Passports Affected by Serious Debt
Then, if you use a passport for business purposes, or just enjoy a lot of traveling to foreign destinations, you need to be aware of any seriously delinquent unpaid federal tax, or your next trip may be cancelled because your passport is no longer valid.
Effective with the FAST Act's enactment, an individual deemed to have a legally enforceable, seriously delinquent tax debt (defined as a debt that has been assessed, is greater than $50,000, and with a lien or levy that has been filed or executed) should be figuring out how to pay the debt, or make arrangements for payment. Otherwise, their passport could be limited, denied or revoked.
Exceptions once again will apply to any tax debt being paid in a timely manner under an agreement, debt for which collection has been suspended, debt that is the subject of a due process hearing that has been requested or is pending, or is subject to election for other relief opportunities.
We'll be tracking the guidance anticipated to be provided by the IRS on both of these issues and will send out additional information once the rules have been established. If you have specific questions about any of the legislation discussed in this article, please contact your Eide Bailly professional for assistance.