Under current law, the Internal Revenue Service (IRS) has the discretionary authority to certify that a taxpayer owes "seriously delinquent tax debt," which, if certified, forces the Treasury Secretary to transmit such certification to the Department of State (State) for denial, revocation or limitation of the taxpayer's passport. The IRS announced this summer that it will issue a letter (Letter 6152, "Notice of Intent to Request US Department of State Revoke Your Passport") to affected taxpayers, giving them advance warning that they are in danger of becoming certified as owing seriously delinquent tax debt, and providing these taxpayers with an opportunity to avoid denial, revocation or limitation of their passport.
A "seriously delinquent tax debt" means an unpaid, legally enforceable federal tax liability of an individual (1) which has been assessed, (2) which is greater than $50,000 (indexed for inflation; $52,000 in 2019), and (3) with respect to which (a) a notice of lien has been filed pursuant to Section 6323 of the Internal Revenue Code of 1986, as amended (the Code) and the administrative rights under Section 6320 of the Code with respect to such filing have been exhausted or have lapsed, or (b) a levy is made pursuant to Section 6331 of the Code.
A seriously delinquent tax debt does not include non-tax debts, including Affordable Care Act assessments, criminal restitution assessments, child support obligations or Report of Foreign Bank and Financial Accounts (FBAR) assessments. It also does not include (1) a debt that is being timely paid pursuant to an installment agreement or an offer-in-compromise, or (2) a debt with respect to which collection is suspended because a due process hearing is requested or pending, or because innocent spouse relief has been requested or is pending.
In July 2019, the IRS indicated that it would begin issuing letters called "IRS Letter 6152" to taxpayers who have seriously delinquent tax debt warning them that the IRS may transmit certifications relating to such debt to State, who in turn may revoke the taxpayers' passports. This letter is intended to serve as a notice for taxpayers to contact the IRS upon receipt of such letter so that they might make a good faith effort to resolve their tax debts before the IRS contacts State. Taxpayers must contact the IRS within 30 days of receiving the letter (or 90 days for taxpayers who live outside the United States). (The IRS sends a notice called a "Notice CP 508C" to taxpayers who the IRS has certified to State as owing a seriously delinquent tax debt.)
To avoid having the IRS notify State about a seriously delinquent tax debt status, a taxpayer can, of course, pay the tax debt in full, or pay under an installment agreement, offer-in-compromise, or settlement agreement with the Department of Justice.
Under certain circumstances, taxpayers may not be subject to an IRS certification, and potential revocation of their passport. Those circumstances include:
- victims of tax-related identity theft;
- accounts that are currently not collectible due to hardship;
- taxpayers who are located within a federally declared disaster area;
- taxpayers who have a request pending with the IRS for an installment agreement;
- taxpayers who have a pending offer-in-compromise with the IRS; or
- taxpayers who have a pending adjustment that will pay the full tax period.
However, the IRS announced that it will not provide a broad exception for taxpayers who have open cases with the IRS Office of the Taxpayer Advocate, an independent organization within the IRS that assists taxpayers with navigating the IRS.
The IRS must reverse its certification to State when the tax debt has been fully satisfied, or when the tax debt ceases to be treated as seriously delinquent tax debt. Taxpayers will receive a separate notice from the IRS of its reversal of certification.
Taxpayers may file suit in district court or Tax Court to challenge the validity of a certification. There is no administrative appeals process to challenge a certification.
In summary, taxpayers who know or anticipate a seriously delinquent tax debt must consider the consequences beyond just interest and penalties, such as an impact on the taxpayers' ability to travel internationally. Pay attention to any correspondence from the IRS and respond to the IRS by the deadlines set out in such correspondence.
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.