As we’ve written about before, a new law passed on December 4, 2015 gives the Secretary of State the authority to refuse or revoke passports to “seriously delinquent” taxpayers. As we expected, it has taken the State Department and IRS quite a while to nail down the details of how this process will work. We’ve now see the biggest update to this new law as posted on https://www.irs.gov/businesses/small-businesses-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes.
They themselves say that the new law isn’t officially implemented yet:
"The IRS has not yet started certifying tax debt to the State Department. Certifications to the State Department will begin in early 2017, and this webpage will be updated to indicate when this process has been implemented."
Some highlights from the page:
If you have a “seriously delinquent tax debt”, IRC § 7345 authorizes the IRS to certify that to the State Department. The department generally will not issue or renew a passport to you after receiving certification from the IRS. Upon receiving certification, the State Department may revoke your passport. If the department decides to revoke it, prior to revocation, the department may limit your passport to return travel to the U.S.
A “seriously delinquent tax debt” is an unpaid federal tax debt totaling more than $50,000 (including interest and penalties) for which a:
- Notice of federal tax lien has been filed and all administrative remedies have lapsed or been exhausted or
- Levy has been issued
Some tax debt is not included in determining seriously delinquent tax debt even if it meets the above criteria. It includes tax debt:
- Being paid in a timely manner under an installment agreement entered into with the IRS
- Being paid in a timely manner under an offer in compromise accepted by the IRS or a settlement agreement entered into with the Justice Department
- For which a collection due process hearing is timely requested in connection with a levy to collect the debt
- For which collection has been suspended because a request for innocent spouse relief has been made
Before denying a passport, the State Department will hold your application for 90 days to allow you to:
- Resolve any erroneous certification issues
- Make full payment of the tax debt
- Enter into a satisfactory payment alternative with the IRS
All written notice will be sent via regular mail to your last known address.
The IRS will notify the State Department of the reversal of the certification 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:
- You and the IRS enter into an installment agreement allowing you to pay the debt over time.
- The IRS accepts an offer in compromise to satisfy the debt.
- The Justice Department enters into a settlement agreement to satisfy the debt.
- Collection is suspended because you request innocent spouse relief.
- You make a timely request for a collection due process hearing in connection with a levy to collect the debt.
The IRS will not reverse certification where a taxpayer requests a collection due process hearing or innocent spouse relief on a debt that is not the basis of the certification. Also, the IRS will not reverse the certification because the taxpayer pays the debt below $50,000. So it’s all or nothing.
If you can’t pay the full amount you owe, you can make alternative payment arrangements such as an installment agreement or an offer in compromise and still keep your U.S. passport.
If you disagree with the tax amount or the certification was made in error, you can contact the phone number listed on Notice CP 508C (855-519-4965 or 267-941-1004 for international). If you’ve already paid the tax debt, you can send proof of that payment to the address on the Notice CP 508C.
If you need your U.S. passport to keep your job, once your seriously delinquent tax debt is certified, you must fully pay the balance, or make an alternative payment arrangement to keep your passport. So basically, the IRS does not care.
Once you’ve resolved your tax problem with the IRS, the IRS will reverse the certification within 30 days of resolution of the issue.
If you’re leaving in a few days for international travel and need to resolve passport issues, you can call the phone number listed on Notice CP 508C (855-519-4965 or 267-941-1004 for international). If you already have a U.S. passport, you can use your passport until you’re notified by the State Department that it’s taking action to revoke or limit your passport.
If you're concerned about a tax matter that may affect your passport, contact us. Call us at 888-727-8796 or email firstname.lastname@example.org.
We also offer a service for a flat fee where we can contact the IRS on your behalf without raising any red flags to find out exactlly what they think about your tax issue (how much you owe, when the debt expires, etc). To learn more about that service, click here.
Check back for updates as to when this process will officially be implemented.