Selected Tax Provisions in the Fixing America’s Surface Transportation (FAST) Act

The FAST Act (P.L. 114-94) was signed into law on December 4, 2015.  The Act funds certain Federal surface transportation programs through 2020.  Several tax provisions were included in the Act.

Revocation or Denial of Passports to Certain Delinquent Taxpayers

The IRS will provide the State Department information on taxpayers having “seriously delinquent tax debt” exceeding $50,000 (as indexed for inflation after 2016).  The State Department would then have grounds to deny, revoke, or limit the use of a U.S. passport effective January 1, 2016.  A seriously delinquent tax debt arises when a notice of lien (a security interest in property) or levy (a seizure of property) has been filed by the IRS.  Exceptions are:

·        The taxpayer is making timely payments under an installment agreement or under an offer in compromise.

·        Collection efforts have been suspended for a due process hearing or for innocent spouse relief.

Use of Private Debt Collectors

Despite past protestations from the National Taxpayer Advocate, Congress has now mandated that the IRS hire private debt collectors for “inactive tax receivables.”  The term “tax receivable” means any outstanding assessment which the IRS considers potentially collectible.  The term “inactive tax receivable” means any tax receivable if:

·        At any time after assessment, the IRS removes such receivable from the active inventory for lack of resources or inability to locate the taxpayer,

·        More than 1/3 of the period of the applicable statute of limitation has lapsed and such receivable has not been assigned for collection to any employee of the IRS, or

·        In the case of a receivable which has been assigned for collection, more than 365 days have passed without interaction with the taxpayer or a third party for purposes of furthering the collection of such receivable.

Repeal of Lengthened Automatic Filing Extension Time Period for Forms 5500

One of the provisions enacted on July 31, 2015 in the temporary highway funding bill was to lengthen the automatic extension of time to file Form 5500 for retirement and benefit plans from 2 ½ months to 3 ½ months for tax years beginning after 2015.  The FAST Act now restores the prior 2 ½ month extension period by repealing the 3 ½ month period.