The Taxpayer Advocate recently wrote about concerns with the new IRS enforcement program for "seriously delinquent tax debt" that allows for the denial of an passport application or revocation of a passport. The IRS announced that it had started certifying taxpayers to the Department of State in March.
For more background on 2015 Fixing America's Surface Transportation (FAST) Act and details of the program, please read our February blog post. Restricting the right to travel to force compliance is not new. It has been used to in the context of unpaid child support for years, but the notice requirements of the IRS program may not be adequate.
Seriously delinquent tax debt & exceptions
To be considered seriously delinquent tax debt, there must be an assessed and unpaid amount of $50,000 or more. For a passport to be in jeopardy, the IRS must have filed a notice of lien with the Collections Due Process (CDP) hearing rights having passed. A levy may also trigger passport issues.
The following exceptions include:
- Making payments through an installment agreement or offer in compromise
- A suspended collection action due to a requested CDP of pending CDP
- Certain innocent spouse situations
- Currently Not Collectible (CNC) status
Several other narrow exceptions are available as well. The best way to avoid playing defense when passport actions go into effect is to contact an experienced tax attorney to develop a strategy to solve the underlying problems today.
The recent concerns of the Taxpayer Advocate relate to the notice that the IRS will send out prior to taking passport action.
In the child support context, an agency must send out a Pre-offset Notice (PON) and then wait 30 days before denying a passport. This notice is designed to get the attention of a noncustodial parent and encourage action.
The IRS will send a form to a taxpayer when it certifies the serious delinquent tax debt. And CDP notices will contain language about the possibility of potential certification. Is this enough?
The Taxpayer Advocate points to research on salience, which focuses on the timing and relevance of communications and how it affects behavior. A stand-alone passport notice similar to the one in the child support context might better motivate resolution of past tax problems.
More details about how the program will work are expected. As the situation remains uncertain, it is important to seek guidance on mitigating risks when a passport is at stake.