The IRS is warning those with serious delinquent tax debt, currently defined as $52,000 or more, that their passports are subject to being revoked or passport applications or renewals denied.
The actions are allowed under the Fixing America’s Surface Transportation (FAST) Act, which became law in December 2015 but which the government wasn’t seriously enforcing until early last year. Under the law, the IRS notifies the State Department of taxpayers who are seriously delinquent, and the State Department is required to deny those taxpayers’ passport applications or renewals, and may also revoke valid passports.
On Aug. 15 the IRS issued a statement urging taxpayers who receive Notice CP508C to contact the agency promptly to resolve their major tax debts and avoid jeopardizing their passports and travel plans. Notice CP508C indicates that the taxpayer has been certified to the State Department as having seriously delinquent tax debt, and also details steps necessary to resolve the debt.
Those steps include getting help via phone from the IRS to set up a payment plan or explore other payment options. The IRS encourages delinquent taxpayers to act quickly, since some resolutions take longer than others, and said it’s especially important for those with imminent travel plans whose passport applications have been denied to take action promptly.
The IRS can expedite reversal of a taxpayer’s delinquency certification to the State Department, generally shortening the 30-day processing time by two to three weeks, according to the agency. Taxpayers applying for expedited reversal of certifications must be able to prove to the IRS that they live abroad or have travel scheduled within 45 days.
To prove scheduled travel, the taxpayer must provide to the IRS a flight itinerary, hotel reservation, cruise ticket, international car insurance or other document showing the location and approximate date of travel. The agency also requires a copy of a letter from the State Department denying a passport application or revoking the taxpayer’s passport.
The IRS can request that the State Department revoke a taxpayer’s passport if the taxpayer reneges on a commitment to pay, or could resolve the debt through offshore “activities or interests” but chooses not to.
Before asking the State Department to revoke a passport, the IRS will send a Letter 6125 notifying the taxpayer of the pending request to the State Department and offering another chance to resolve the debt. The taxpayer has 30 days from the date of the letter to call the IRS.
“Generally, the IRS will not recommend revoking a taxpayer’s passport if the taxpayer is making a good-faith attempt to resolve their tax debts,” said the agency.
There are a number of ways taxpayers can avoid having the IRS notify the State Department in cases of serious delinquency, among them paying the debt in full, paying it under an approved installment plan, under an accepted compromise offer, or under the terms of a settlement agreement with the Department of Justice. Taxpayers frequently qualify for one of several relief programs, according to the IRS.
In addition, the IRS does not currently certify taxpayers as seriously delinquent who are in bankruptcy, recognized by the IRS as victims of identity theft, whose accounts are not collectible due to hardship, or who are located within a federally declared disaster area.
Likewise, the IRS won’t certify taxpayers to the State Department who have an installment agreement request or compromise offer pending, or who otherwise have an agreement with the IRS to pay the debt in full. Also, a taxpayer serving in a combat zone is not subject to IRS certification, and the taxpayer’s passport won’t be revoked or application denied, until such service ends.
Got to irs.gov for more complete details on the denial or revocation of passports due to serious tax delinquency.