IRS Passport Revocation

In December 2017, the IRS started to formally start the process of certifying to the US Department of State which taxpayers owed more than $50,000 (which will be adjusted for inflation) to the IRS, by collecting that information from their computer systems and verifying it. Per the IRS website, as of January 9, 2018 the IRS has not actually notified the State Department, but that will most likely begin very soon.

Under IRC Sec 7345, of the Internal Revenue Code, if a taxpayer has seriously delinquent income or payroll tax debt, this law causes the IRS to tell the State Department of the tax debt, and the State Department will generally not issue a passport to the affected taxpayer, or revoke your current passport, once they get this notice from the Internal Revenue Service. If the revocation occurs when you are overseas, the State Department, in its discretion, may issue a temporary passport so you can still enter back into the United States.

The definition of seriously delinquent tax debt under this rule is tax debt greater than $50,000 (including interest and penalties), and for which a Notice of Federal Tax Lien or Tax Levy has been issued, and all administrative remedies to contest the tax law have been exhausted. These taxes are also limited to Title 26 taxes, so items like FBAR penalties and collecting child support arrears would not count toward the $50,000 amount. The other very important exceptions to this rule is if you have 1) a valid installment agreement, 2) filed an offer in compromise and it was accepted and you are making the payments, and 3) the collection process has stopped since you filed for innocent spouse relief.

Before the State Department denies the passport, they will give 90 days to 1) make full payment of the tax debt or enter into a IRS payment plan (notice that entering into an installment agreement appears to be enough to stop the process),  2) resolve an error by the IRS that you owe them. The IRS will not reverse the certification if you bring the tax debt below $50,000. The IRS has thirty days to contact the State Department that the tax debt issue has been resolved with a payment plan or some other arrangement. The IRS will mail you a form Notice CP 508R when it reverses its certification.

The IRS will notify taxpayers about this issue by sending them via regular mail a Notice CP 508C. Its very important that if this issue affects you that you take action quickly since the IRS does not act quickly, and it will take time to resolve this tax issue. Under IRC Section 7345 law, the State Department can not be held liable for errors by the IRS. If the IRS makes a mistake in this process, the first step would be to appeal to them to fix the issue. If this is not successful, the next step would be to go to the IRS Taxpayers Advocates office. If this is not successful, you can file suit in the US Tax Court or US District Court to have the court determine if the IRS made a mistake.

By: Timothy S. Hart

 

 

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