Passport restrictions for significant tax debt

The agency is serious about enforcing this provision of tax law against those with serious past-due federal taxes.

Under a relatively recent provision of federal law, U.S. passport holders or applicants may face problems with travel if they owe at least $52,000 in federal taxes, plus penalties and interest. Anyone who needs to travel for business or who has family or personal plans to be abroad should immediately seek to resolve their tax delinquency if the passport restriction could potentially apply to them.

The IRS on February 27, 2019, issued an updated news release warning people about this issue. The agency must certify to the State Department the identity of any taxpayer who meets the $52,000 threshold in federal tax, penalties and interest owed, defined as a "seriously delinquent" tax debt.

To be classified as seriously delinquent, not only must the taxpayer meet the amount requirement, but also the agency must have filed a Notice of Federal Tax Lien, followed either by the time to challenge the notice passing or the agency issuing a levy.

Upon certification to the Department of State, the IRS also sends a Notice CP508C to the taxpayer. The notice lays out how the taxpayer can resolve the past-due tax problem to head off the passport restriction.

The law requires the State Department to deny the passport application or renewal for certified taxpayers, but the department will hold the application for 90 days to give the taxpayer time to resolve the matter with the IRS. People already holding passports in this situation may face passport revocation or government limits on foreign travel.

Some taxpayer action that could cause the IRS to consider the seriously delinquent tax problem resolved for these purposes are:

  • Setting up a satisfactory payment plan or installment agreement
  • Requesting an adjustment to a previous tax assessment
  • Paying the past-due amount
  • Resolving any errors in the certification

To head off the certification of serious delinquency from issuing at all, the taxpayer also may be able to resolve the matter through:

  • Arranging an acceptable offer in compromise
  • Entering into a settlement agreement
  • Requesting a collection due process appeal with a levy
  • Requesting innocent spouse relief
  • And other actions

Situations that could prevent certification or cause the IRS to reverse it include:

  • Bankruptcy
  • Identity theft
  • Tax not collectible because of hardship
  • Taxpayer living in disaster area or combat zone
  • IRS-approved adjustment to tax due

Anyone facing the potential of passport restriction should act immediately as resolution may take some time. After the taxpayer resolves the problem to the satisfaction of the IRS, the agency has 30 days to reverse the previous certification. In urgent situations, the IRS may escalate the "decertification notice" to the Department of State.

A tax attorney can help to work with the IRS and State Department and can provide legal advice about potential remedies. The tax lawyers at Brown PC in Fort Worth, Texas, represent taxpayers throughout the U.S. and worldwide facing potential loss of passport privileges.

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