IRS Agrees To Hold Off Denying Passport Privileges For Certain Taxpayers

Taxpayers who are seriously behind on their taxes to the IRS are putting their passports in jeopardy!

Fixing America’s Surface Transportation Act

Under section 32101 of the Fixing America’s Surface Transportation Act (“FAST Act”), signed into law in December 2015, the IRS is required to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt (currently more than $52,000 and meeting certain other requirements under Internal Revenue Code § 7345(b)). Also see Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

Which Taxpayers Are Impacted By The FAST Act?

Taxpayers affected by this law are those with a “seriously delinquent tax debt”.  A taxpayer with a “seriously delinquent tax debt” is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.

The IRS already began certifying certain taxpayers in phases and will continue certifying all seriously delinquent individual taxpayer accounts. The IRS will send a Notice CP 508C to your last known address at the time it certifies your seriously delinquent tax debt to the State Department.

How Can Taxpayers Avoid Notification To The State Department?

There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:

• Paying the tax debt in full
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Taxpayers Not At Risk For Loosing Passport Privileges.

A passport will not be at risk under this program 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 with the IRS for an installment agreement,
• Who has a pending offer in compromise with the IRS, or
• Who has an IRS accepted adjustment that will satisfy the debt in full.

Also for taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.

Additionally, as reported on September 3, 2019 in a blog put out by the National Office Of The Taxpayer Advocate (“TA”), the IRS recently agreed to temporarily exclude taxpayers with cases with the TA from passport certification and to reverse certifications for TA taxpayers who were certified before coming to the TA.

Timeframe And Process To Get IRS Clearance For Passport Renewal Or Application

When a taxpayer applies for a passport (either original issuance or renewal), the State Department, in general, will provide the applicant with 90 days to resolve their tax delinquency with the IRS before denying the application. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact the IRS and resolve the matter within 45 days from the date of application so that the IRS has adequate time to notify the State Department.

The remedy for a taxpayer who believes that a certification to the State Department of a tax delinquency is erroneous or that the IRS incorrectly failed to reverse a certification because the tax debt is either fully satisfied or ceases to be a “seriously delinquent tax debt”, is to file an action in Federal District Court. However, taxpayers in this situation may be able to reach resolution within the IRS with the assistance of qualified tax counsel and thus avoid the delay and expense of bringing an action in Federal District Court.

What Should You Do?

If you have outstanding liabilities with the IRS or any State Tax Agency, protect yourself and preserve your right to travel by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), the San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California are highly skilled in handling tax matters and can effectively represent you at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Additionally, if you are involved in cannabis, check out what a cannabis tax attorney can do for you. By the way – if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.