The U.S. Department of State may decline to issue/renew, revoke, or restrict passports of taxpayers with "seriously delinquent" tax debt from the IRS.
Article Highlights:
The IRS has begun issuing notice CP508C to taxpayers with “seriously delinquent” tax debt. In addition, the service has resumed its program of notifying the State Department of taxpayers’ unpaid federal debts.
The U.S. Department of State generally will not renew a passport or issue a new passport to taxpayers after receiving a certification of “seriously delinquent” tax debt from the IRS. They may revoke or place limitations on current passports. Generally, you can use your passport until the U.S. Department notifies you of State that it’s taking action to revoke or limit your passport.
Once a taxpayer receives the notice CP508C, they have 30 days to dispute the notice. The U.S. Department cautions taxpayers to retain the notice until they have resolved the issue. The IRS contact number is in the top right-hand corner of the CP508C notice. If the debt has already been satisfied, the taxpayer will need to have proof of payment available.
Seriously Delinquent Tax Debt
Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $54,000 (including interest and penalties) for which:
Notice of federal tax lien was filed, and all administrative remedies under the Internal Revenue Code have lapsed or been exhausted, or
A levy has been issued.
The seriously delinquent tax debt amount that triggers the IRS to notify the State Department is inflation-adjusted, so the $54,000 amount applies to 2021 and will undoubtedly increase for 2022.
Getting the Certification Reversed
Once IRS has certified the “seriously delinquent” tax debt to the U.S. Department of State, the IRS will reverse 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:
The taxpayer and the IRS enter into an installment agreement to allow the debt to be paid overtime.
The IRS accepts an offer in compromise to satisfy the debt.
The U.S. Department of Justice enters into a settlement agreement to satisfy the debt.
Suspension of a collection because the taxpayer requests innocent spouse relief.
The taxpayer makes a timely request for a collection due process hearing connected with a levy to collect the debt.
Additionally, a certified debt is no longer seriously delinquent for any taxpayer:
Who is in bankruptcy.
Who is identified by the IRS as a victim of tax-related identity theft.
Whose account the IRS has determined is currently not collectible due to hardship.
Who is located within a federally declared disaster area.
Who has a request pending for an installment agreement with the IRS.
Who has a pending offer in compromise with the IRS.
Who has an IRS-accepted adjustment that will satisfy the debt in full.
How long will it take to get a certification reversed?
Once the tax problem is resolved, in one of the instances included above, the IRS will reverse the certification within three days and notify the U.S. Department of State.
Suppose a taxpayer is already overseas when the State Department revokes or limits the taxpayer’s passport. In that case, the agency will either limit the passport only for return travel to the U.S. or issue a limited passport that only permits return travel.
If you have any questions about tax delinquency or need assistance with an installment agreement or one of the other options discussed, please call our office.