On 1/1/24, the IRS updated its Passport Revocation or Denial Page in cases of certain unpaid taxes. Section 7345 of the Internal Revenue Code requires the U.S. Department of the Treasury to notify the U.S. Department of State if a certification is made that an individual has a “seriously delinquent tax debt.” The Internal Revenue code states that: “Such certification or a reversal of such certification may only be made by the Commissioner of Internal Revenue, the Deputy Commissioner for Services and Enforcement of the Internal Revenue Service (IRS), or the Commissioner of an operating division of the IRS. Upon receipt of a section 7345 certification, the State Department will generally deny an application for issuance or renewal of a passport from such individual and may revoke or limit a passport previously issued to such individual”.
The IRS passport revocation or denial program is a “collection tool”
Passport revocation or denial applies to taxpayers that are seriously behind on their taxes. These taxpayers ought to pay what they owe or enter into a payment agreement with the IRS to avoid putting their U.S. passports in jeopardy. If you are a Taxpayer that is behind on your tax obligations, you ought to come forward and pay what you owe or enter into a payment plan with the IRS. Best way to protect your U.S. passport is to consult with a specialized tax advisor that can assist you with the establishment of a payment plan with IRS.
Definition of seriously delinquent tax debts
The IRS states that seriously delinquent tax debts are legally enforceable, unpaid federal tax debt (including assessed penalties and interest) totaling more than $62,000 (adjusted yearly for inflation). These debts include U.S. individual income taxes, trust fund recovery penalties, business taxes for which taxpayers are personally liable for and other civil penalties. The IRS must have filed a Notice of Federal Tax Lien, and all administrative remedies under the law have lapsed, or have been exhausted or issued a levy in their efforts to collect these debts.
Taxpayers are Notified via IRS Notice CP508C
The IRS is required to notify Taxpayers in writing at the time that the IRS certifies seriously delinquent tax debt to the U.S. State Department. IRS sends written notices by regular mail to the Taxpayer’s last known address. A Taxpayer’s Power of Attorney (POA) representative does NOT receive a copy of the CP508C.
The IRS will reverse the certification to the U.S. State Department when:
- The tax debt is fully satisfied or becomes legally unenforceable.
- The tax debt is no longer seriously delinquent.
- The certification is erroneous.
A previously certified debt is no longer seriously delinquent when:
- Debts being timely paid through IRS-approved installment agreements.
- Debts being timely paid with an offer in compromise accepted by the IRS.
- Settlement agreements entered into with the Department of Justice.
- Those suspended because of a request for innocent spouse relief.
- Taxpayer is in bankruptcy.
- Taxpayer is identified by the IRS as a victim of tax-related identity theft.
- The IRS has determined that the taxpayer account is “currently not collectible” due to hardship.
- Taxpayer is located within a federally declared disaster area.
- Taxpayer has a request pending with the IRS for an: installment agreement or offer in compromise.
- Taxpayer has an IRS-accepted adjustment that will fully satisfy their tax debt.
The U.S. State Department is held harmless in these matters and cannot be sued for any erroneous notification or failed decertification under the law
The IRS states that: “If the IRS certified a taxpayer’s debt to the State Department, they could file suit in the U.S. Tax Court or a U.S. District Court to have the court determine whether the certification is erroneous, or whether the IRS failed to reverse the certification when it was required to do so. If the court determines the certification is erroneous or should be reversed, it can order the IRS to notify the State Department that the certification was in error. The law doesn’t give the court authority to release a lien or levy or award money damages in a suit to determine whether a certification is erroneous. Taxpayers are not required to file an administrative claim or otherwise contact the IRS to resolve the erroneous certification issue before filing suit in the U.S. Tax Court or a U.S. District Court.”
Taxpayers may not learn the IRS has certified their tax debts until after certification
IRS may be pursuing Taxpayers who are already actively trying to resolve their seriously delinquent tax debt non-payment problems. Taxpayers ought to consider that:
- IRS is NOT sending separate and stand-alone pre-certification notices that could potentially provide taxpayers with the right to challenge the IRS’s position and be heard.
- There are timing issues that further jeopardize a Taxpayer’s U.S. passport such as Taxpayers that have received CP508C notices despite the fact that a Taxpayer’s tax liability had been paid in full, as well as Notices one month after a liability was paid in full, or after having an existing installment agreement in place.
In sum, the IRS passport revocation or denial program is designed to encourage taxpayers to pay their delinquent tax debts. A specialized tax advisor with IRS payment options experience makes the most sense for those taxpayers that have certified seriously delinquent tax debt.
Do you have seriously delinquent tax debts?
Have you received a CP508C Notice?
Who is your specialized tax advisor ©
