Hey, sports fans and tax dodgers alike! Today marks the electrifying start of the 2024 Olympic Games, and as the world tunes in to the opening ceremony, bursting with pomp and patriotism, there’s a less discussed, but crucial angle to consider: How could our celebrated Olympians possibly be stopped in their tracks by none other than the IRS?
You heard that right. Imagine training your whole life, pushing past every imaginable limit, only to be sidelined not by an injury, but by the IRS. Sounds far-fetched? It’s not. Here’s the lowdown on how the IRS could potentially revoke or deny your passport, leaving dreams of Olympic gold hanging by a thread.
The IRS and Your Passport
Under the Fixing America’s Surface Transportation (FAST) Act, the IRS was given the authority to certify taxpayers with “seriously delinquent tax debts” to the U.S. State Department, which can then deny, revoke, or limit the ability of these individuals to use their passports. This isn’t just for the high rollers or the big-time tax evaders—this can affect anyone who meets certain criteria.
What Qualifies as “Seriously Delinquent”?
A seriously delinquent tax debt is one where the taxpayer owes more than $55,000 (this threshold is adjusted annually for inflation), and where the IRS has:
- Filed a Notice of Federal Tax Lien and the period to challenge it has expired, or
- Issued a levy.
Why Olympians?
Think about it. Olympians, though not always rolling in endorsement dough, often have complicated financial lives. Training costs, travel expenses, equipment—much of it can be deducted, but these deductions must be properly documented and filed. Miss a few details (or tax returns), and suddenly those deductions are moot, and you’re in the red with the IRS.
The Road to Reinstatement
If an Olympian—or anyone, for that matter—finds themselves flagged by the IRS, all is not lost. There are several steps you can take to resolve the issue:
- Pay the debt in full: The simplest, though not always the most feasible solution.
- Set up an installment agreement: This allows you to pay off your debt over time.
- Offer in Compromise: Settle your debt for less than the full amount owed, if you can prove paying in full would cause financial hardship.
- Prove that the certification was erroneous: If the IRS made a mistake, proving it can get your passport restrictions lifted quickly.
Don’t Let This Happen to You
Whether you’re gunning for gold or just trying to stay afloat, the key takeaway here is simple: Don’t mess with the IRS. Filing your taxes correctly and on time, every time, is the only surefire way to avoid the messy business of tax liens, levies, and the potential loss of your passport.
For those who haven’t filed in over three years, consider this a wake-up call. The last thing you want is to be gearing up for the trip of a lifetime—or a shot at Olympic history—only to find you’re grounded due to unresolved tax issues.
Need help getting back on track? Head over and get my free E-Book for more detailed advice on dealing with back taxes, or consult a tax professional who can help you negotiate with the IRS effectively. Remember, when it comes to the IRS, an ounce of prevention is worth a pound of cure—or in Olympic terms, a stitch in time saves nine…hundredths of a second off your sprint time.
Let the games begin, and may your tax troubles be few and your victories sweet!
Andrew Samaniego, EA, CTRC, MSCTA
Andrew Samaniego Tax Planning & Resolution
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