On January 12, 2018, the IRS recently announced that it will be reporting taxpayers who have seriously delinquent tax debts of $50,000 or more to the State Department under IRC Sec. 7345. The State Department generally will not issue passports to those certified as IRS delinquents under Notice 2018-01.
The IRS is currently limiting enforcement and certification to individuals who owe more than $50,000, for debts reduced to a federal tax lien, for which all administrative remedies have expired, which are in enforced collections, and for which a levy has already been issued. If you receive an IRS Notice of Intent to Levy, it is important to act before the IRS revokes your passport.
The IRS has provided guidance that the following actions will stop certification that has not yet occurred: 1) applying for an Installment Agreement; 2) submitting an Offer-in-Compromise for consideration by the IRS; or 3) getting classified by IRS as currently-not-collectible due to a hardship.
In one article in Forbes, by tax writer Robert W. Wood, founder of Wood, LLP, “How Overdue Taxes Can Jeopardize Passports,” the author points out that the $50,000 limit for passport revocation includes interest & penalties such that a $20,000 debt that goes unpaid can potentially trigger certification to the State Department after a relatively short period of time. The article also talks about the fact that there are procedural avenues to contest the certification with IRS or to ask the State Department to hold an application open while a taxpayer tries to bring themselves into good standing using one of the options mentioned in the previous paragraph.
The IRS is required to notify you in writing at the time the IRS certifies seriously delinquent tax debt to the State Department by issuing Notice CP 508C. The IRS is also required to notify you in writing at the time it reverses certification with Notice CP 508R.
The IRS will reverse a certification when:
- The tax debt is fully satisfied or becomes legally unenforceable.
- The tax debt is no longer seriously delinquent.
- The certification is erroneous.
The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practicable.
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 under IRC § 6015.
- You make a timely request for a collection due process hearing regarding 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.
If you have questions about State Department certification, passport revocation or collection alternatives to stop certification give us a call at (201) 529-8024 or e-mail me at [email protected]
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