IRS Revoking & Denying Passports
If you owe the IRS money, you may be in danger of losing your U.S. passport.
The IRS has recently stepped up their collection efforts by working with the State Department to revoke or deny passports to those who have seriously delinquent accounts.
If you would like to schedule a free, no-obligation call to discuss your personal tax situation, please contact us.
IRS Issues Passport Denial Rules
Implementation of These Rules are Now in Effect
The statutory denial or revocation of an individual’s passport where the individual has a seriously delinquent tax debt was enacted in December 2015. Recently, the IRS published a Notice explaining the workings of the new rules.
Additional important details have been added to the IRS Internal Manual. An IRS news release warns Travelers Requiring Passports to Pay Their Back Taxes or Enter into Payment Agreements
New Details from IRS Explained
The IRS has provided new details about tax debts that can impact your ability to travel. The IRS is required by law to notify the State Department once your tax debt is certified as "seriously delinquent." After that, the State Department will generally deny issuing or renewing a passport.
The State Department can even revoke a passport already in use.
The law was enacted back in 2015, but the IRS and State Department are only now implementing the rules.
The rules are not limited to criminal tax cases, or even where the IRS thinks you are trying to escape a tax debt. The IRS first notifies the State Department, then the State Department generally will not issue or renew your passport. However, this only applies to a seriously delinquent tax debt, more than $50,000. That would include any penalties and interest that you may owe.
A $25,000 tax debt can grow to $50,000 including penalties and interest faster than you might think.
STEPS TO TAKE to KEEP OR GET A PASSPORT
Taxpayers possibly affected by the new law, found in section 7345 of the Internal Revenue Code, should immediately take steps to understand their situation and, where required, guard against IRS actions that might jeopardize their US passport.
The IRS first notifies the State Department, then the State Department generally will not issue or renew your passport. taxpayers notified that certification of their seriously delinquent tax debt has been transmitted to the State Department should consider:
- Paying their taxes in full
- Entering into an installment agreement
- Making an offer in compromise
If a certified taxpayer applies for a passport, the State Department, in general, will provide the applicant with 90 days to resolve the tax delinquency before denying the passport 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.
If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.
Upon receiving certification, the State Department shall deny your passport application and/or may revoke your current passport. If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.
The IRS is required to notify you in writing at the time the IRS certifies seriously delinquent tax debt to the State Department. The IRS is also required to notify you in writing at the time it reverses certification. The IRS will send written notice by regular mail to your last known address.
The IRS will reverse a certification when:
- The tax debt is fully satisfied or becomes legally unenforceable.
- The tax debt is no longer seriously delinquent.
- The certification is erroneous.
The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practicable.
A previously certified debt is no longer seriously delinquent when:
- You and the IRS enter into an installment agreement allowing you to pay the debt over time.
- The IRS accepts an offer in compromise to satisfy the debt.
- The Justice Department enters into a settlement agreement to satisfy the debt.
- Collection is suspended because you request innocent spouse relief under IRC § 6015.
- You make a timely request for a collection due process hearing regarding a levy to collect the debt.
The IRS will not reverse certification where a taxpayer requests a collection due process hearing or innocent spouse relief on a debt that is not the basis of the certification. Also, the IRS will not reverse the certification because the taxpayer pays the debt below $50,000.
How to Proceed
A large number of tricky questions can arise with passport certification cases. For example, a certification, in effect, can be reversed or decertified if the taxpayer obtains an abatement of a penalty on the basis of reasonable cause. A request for “reasonable cause” abatement should be approached carefully.
The handling of this matter, it must be emphasized, can be extremely important. Individuals should pay close attention to the subject and consult competent advisors.
Freeman Tax law has extensive experience in dealing with the IRS and collection issues. Please contact our office to discuss your personal tax situation.
IRS Collections Help
Freeman Tax Law is a comprehensive international tax firm, comprised of a full-service team of Attorneys, CPA's and former IRS agents.
We have handled hundreds of IRS cases, and will help you understand your obligation in regards to your passport and IRS debt. We will clearly explain all of your options to get in compliance with the IRS.
CONTACT FREEMAN TAX LAW
Federal and state laws change frequently. For current tax or legal advice, an attorney or CPA should be consulted. The information contained in this article is not exhaustive, and is not a substitute for competent legal advice.
If you have a questions regarding your personal tax situation - please contact us. The initial consultation is always free, and of course all communication will be confidential.
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