Tax-Related Passport Restrictions and IRS Notices of Seriously Delinquent Federal Tax Debts
For the past year, the IRS has been issuing taxpayers Notices of Certification of Seriously Delinquent Federal Tax Debt. These notices inform taxpayers of serious consequences related to outstanding tax debts that are classified as “seriously delinquent,” which can include the denial of passport rights and limitations on foreign travel.
Congress enacted section 7345 of the Internal Revenue Code as part of the Fixing America’s Surface Transportation (FAST) Act on December 4, 2015. Section 7345 requires that the Internal Revenue Service notify the State Department of taxpayers that are certified as owing a seriously delinquent tax debt. The FAST Act generally prohibits the State Department from issuing or renewing a passport to a taxpayer with seriously delinquent tax debt.
Taxpayers receiving a Notice CP508C, Notice of Certification of Seriously Delinquent Federal Tax to the State Department, are put on notice that the IRS has certified their tax debt in accordance with section 7345 and the FAST Act.
Seriously delinquent tax debt is a tax debt (including penalties and interest) totaling more than $51,000 for which:
- The IRS has filed a notice of federal tax lien and the taxpayer’s administrative rights under section 6320 of the Internal Revenue Code have been exhausted or lapsed, or
- the IRS has issued a levy to collect the tax debt.
The $51,000 threshold is adjusted yearly for inflation.
Taxpayers with an outstanding certification referenced in the Notice of Certification of Seriously Delinquent Federal Tax will be denied with respect to any application for a passport or passport renewal. In addition, the State Department may revoke the taxpayer’s passport or limit their ability to travel outside of the United States.
If the IRS has issued a Notice of Certification of Seriously Delinquent Federal Tax that is incorrect, a taxpayer should take action quickly. A taxpayer can also bring a civil action in a District Court of the United States or the United States Tax Court to have a court determine whether the certification was erroneous or whether the IRS failed to reverse the certification pursuant to section 7345(c) of the Internal Revenue Code.
For more links to tax collection resources and defenses, review our prior posts on federal tax liens and levies, such as WHAT YOU NEED TO KNOW ABOUT FEDERAL TAX LIENS AND LEVIES.
Need assistance in managing the audit process? Freeman Law’s team of attorneys and dual-credentialed attorney-CPAs regularly represents taxpayers before the IRS and Texas Comptroller. Our team also provides tax return-related representations and helps taxpayers navigate state tax laws. Our Firm offers value-driven services and provides practical solutions to complex issues. Schedule a consultation or call (214) 984-3410 to discuss our tax representation services.