IRS Debt and Passports: What Travelers Need to Know

by Frederik Stefani
April 15, 2019
Internal Revenue Service (IRS) has warned the public through a friendly reminder that it has the authority to revoke US passports. It could also ask the Department of State to deny US passport applications for individuals who are considered to have “seriously delinquent tax debt.”  Internal Revenue Services has made it clear that it will deny or revoke a citizen’s US passport to such individuals. Internal Revenue Services warns taxpayers to act promptly to resolve tax debt issues. Otherwise, they will face severe consequences, including a travel ban by denying a US passport application or revoking an existing US passport.

In 2015, the Fixing America’s Surface Transportation Act (“FAST Act” or IRC § 7345) mandated that the Department of State deny or revoke a US passport to any individual with Seriously Delinquent Tax Debt (SDTD). According to IRS regulations, Seriously Delinquent means owing more than $52,000 (including interests and penalties) where notice has been filed and remedies have expired. A person with SDTD will receive a Notice CP508C from the IRS that certifies the debt to the State Department. At this point, the individual will have a US passport application denied or have an issued US passport revoked until the debt is no longer seriously delinquent and the certified debt status reversed.

Individuals in SDTD status have options to reverse the certification by working with the IRS toward paying back taxes. Usually, the remaining excess must be paid in full or the taxpayer and the IRS must agree to an installment arrangement.  It is important to note that a pending installment agreement will likely prevent certified debt status prior to a Notice CP508C being issued. However, only a finalized collection alternative will result in de-certification once the Notice is filed. If your employment or business depends upon your passport and you have tax debt, don’t wait for the CP508C notice to arrive.

It has yet to be confirmed whether IRC § 7345 will be a useful collection tool for the IRS.  Nevertheless, its effects will undoubtedly cause problems for at least a few unsuspecting taxpayers.  To proper understand of IRC § 7345, available collection alternatives, and collection appeal rights, the potential effect of this law can be mitigated for taxpayers with significant outstanding tax liabilities.

Need help with IRS issues or disputes? Migration Resource Center’s Low-Income Taxpayer Services program can help.
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