Ezekwo v Commissioner, T.C. Memo. 2022-54 | May 31, 2022 | Lauber, J.| Dkt. No. 15454-21P

Opinion

Short Summary: This case involves revocation of a taxpayer's passport due to a seriously delinquent tax debt. Ifeoma Ezekwo filed tax returns for 2003, 2004, 2005, 2006, and 2010, but she did not pay the full amounts of tax reported as due. The IRS assessed the amounts reported, plus interest. To collect, the IRS sent various notices of intent to levy. Ezekwo untimely requested a collection due process (CDP) hearing concerning the levy notice covering tax years 2003 and 2004, but she was offered an equivalent hearing pursuant to Treas. Reg. § 301.6330-1(i). That matter resolved in 2007. Ezekwo did not request a CDP for any other matters for any other tax years in issue. On April 19, 2021, the IRS certified Ezekwo as an individual owing a seriously delinquent tax debt (roughly $90,201) arising from tax years 2003, 2005, 2005, 2006, and 2010, and the IRS sent a Notice CP508C, Notification of Certification of Your Seriously Delinquent Federal Tax Debt to the State Department. Ezekwo satisfied through levies, her $17,346 tax liability for 2003, leaving a liability for the remaining four years in the amount of $72,855. In the Tax Court, Ezekwo argued (1) the IRS certification was erroneous because the funds were collected by the IRS by levy; and (2) the IRS harassed her and refused to give her accounting of how the money was applied. The IRS filed the Motion for Summary Judgement on those issues.

Key Issues:

Primary Holdings:

  • From the evidence presented, Ezekwo owed the assessed amounts in an amount higher than $72,855.00, which exceeded the threshold of $54,000.00 required for the certification. The IRS met the criteria to certify that Ezekwo has a "seriously delinquent tax debt" as provided in section 7345 of the Code, and thus, the certification was proper.

Key Points of Law:

  • Section 7345(a) provides that, if the IRS certifies that a taxpayer has "a seriously delinquent tax debt," that certification shall be transmitted "to the Secretary of State for action with respect to denial, revocation, or limitation of [the taxpayer's] passport." The IRS must notify the taxpayer contemporaneously with the making of such certification. § 7345(d).
  • An individual taxpayer has seriously delinquent tax debt when such individual has unpaid, legally enforceable Federal tax liability in the following scenarios: (i) it has been assessed, (ii) is greater than the applicable threshold amount, and (iii) with respect to which a lien notice has been filed or a levy made. See 26 U.S.C. § 7345(b)(1).
  • A "seriously delinquent tax debt" is a federal tax liability that has been assessed, exceeds $50,000 (adjusted for inflation), is unpaid and legally enforceable, and with respect to which a lien notice has been filed or a levy made. § 7345(b)(1), (f). The adjusted threshold amount for 2021, the year of Ezekwo's certification, was $54,000. See Proc. 2020-45, § 3.59, 2020-46 I.R.B. 1016, 1027 ("Revocation or Denial of Passport in Case of Certain Tax Delinquencies. For calendar year 2021, the amount of a serious delinquent tax debt under § 7345 is $54,000").
  • Once the taxpayer has received the notices of the certification, the taxpayer may bring a civil action against the United States in a district court of the United States, or against the IRS (Commissioner) in the Tax Court, to determine if the certification was wrong or the Commissioner failed to reverse it. See 7345(e)(1).
  • If a certification is found to be erroneous or if the debt in issue for certification ceases to be a seriously delinquent tax debt, the IRS must reverse its certification and notify the Secretary of State and the taxpayer. § 7345(c)(1), (d), (e)(2).

Insights: This case involves the passport-related consequences of not providing proper support documentation to evidence that any taxes and interest owed were duly paid by the taxpayer. For additional information on these section 7345 issues, please see Freeman Law attorney, Greg Mitchell's blog on Passport Revocations Under Section 7345 (April 10, 2022). Additionally for Ezekwo, no CDP was requested on time by the taxpayer, which, created a higher tax contingency for the latter. Individuals are subject to duly pay taxes and comply with requirements of the Code and Treasury Regulations on time. Without proper documentation supporting any allegation asserted against the IRS's position, the "empty" arguments will not be considered as proper evidence against the IRS. It is advisable to request any legal means on time and to provide, in admissible form, all the support documentation to avoid a higher tax contingency before the IRS, including potential revocation of passport privilege.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.