As of January 29, 2018, the IRS will send a certification to the U.S. Department of State when a Taxpayer has a “seriously delinquent tax debt.”  The State Department generally will not issue a passport to you after receiving the IRS “seriously delinquent tax debt” certification.  It may also result in revocation of or limitations on your passport.  A “seriously delinquent tax debt” is a tax debt that is greater than $50,000 (which amount will be adjusted annually for inflation).

The IRS is prohibited from issuing the certification until after either:  (a) a notice of federal tax lien has been issued and the Collection Due Process appeal rights have been exhausted or lapsed, or (b) a tax levy has been issued.  See IRC Section 7345(b)(1)(C).

Consequently, it is imperative that Taxpayers assert their Collection Due Process rights to insure that their rights to a passport are not impeded by the IRS.

Taxpayers can fight the issuance of the IRS “Seriously Delinquent Tax Debt” certification by taking the following actions:

1) Successfully negotiating and complying with an installment agreement with the IRS.

2) Successfully negotiating and complying with the terms of an Offer in Compromise with the IRS.

3) Successfully obtaining a full bankruptcy discharge.

4) Successfully obtaining Innocent spouse relief.

5) Requesting Collection Due Process Hearing rights and pursuing all remedies including Tax Court litigation related to Collection Due Process rights.

6) Successfully establishing that the IRS assessment of taxes is erroneous or otherwise establishing that the taxes are not legally collectible.

7) Establishing that the Certification is Erroneous.

Tax Court Litigation:

The IRS is required to issue a letter (Known as “Notice CP 508C” or “Notice CP 508R”) after either the IRS issues the certification to the U.S. Department of State or issues a reversal of the certification.  Taxpayers can petition the United States Tax Court after these letters have been issued.  The Tax Court as the power to determine that the certification was erroneous.  The Tax Court determination should result in the reversal any revocations, denials and/or limitations to a taxpayer’s passport which are exclusively related to the IRS “seriously delinquent tax debt” certification

In order to protect your passport and ability to travel, it is imperative that you engage a skilled tax attorney at the earliest moment to insure that your rights are protected and your passport is not impacted by a failure to pay federal taxes.

David C. Holtz is a tax attorney and a principle at Holtz, Slavett & Drabkin.  David is a former IRS Tax Litigation for the Office of Chief Counsel fo the IRS and a Special Assistant United States Attorney.   David is also a former Certified Public Accountant.  David has been a tax professional since 1993.  David’s practice exclusively consists of Tax Problem resolution.  David regularly speaks related to Tax Controversy issues such as  advanced technics of protecting taxpayers from collection actions such as levy, liens, foreclosures, etc.