Delinquent Taxpayers May Be Denied a U.S. Passport

If you owe more than $50,000 in taxes to the IRS, your passport could be revoked or denied.

If you owe the IRS more than $50,000 in back taxes, you might have to forget about taking a foreign trip in 2018 or later. Back in 2015, Congress passed a controversial law (IRC Section 7345) that for the first time required that seriously delinquent taxpayers’ passports be revoked or denied. The IRS has announced that it will begin enforcing this law in January 2018.

Starting in 2018, if you have a seriously delinquent tax debt, the IRS will certify the debt to the U.S. State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS. If you already have a passport, the State Department may revoke it.

What’s a Seriously Delinquent Tax Debt?

Passport revocation applies only if you (1) owe the IRS more than $50,000 in back taxes (including penalties and interest assessed by the IRS), and (2) the IRS has filed a notice of lien or levy to collect the debt. Thus, it’s not enough simply to owe over $50,000 to the IRS. The IRS must have also filed a tax lien or levy. The IRS can file a Notice of Federal Tax Lien after it:

  • assesses a tax liability
  • sends a Notice and Demand for Payment to the taxpayer stating how much is owed, and
  • the taxpayer fails to fully pay the amount within 10 days.

The IRS routinely files such tax liens.

Some tax debt is not included in the $50,000 threshold even if it meets the above criteria. This includes tax debt:

  • being paid in a timely manner under an installment agreement entered into with the IRS
  • being timely paid under an offer in compromise accepted by the IRS or a settlement agreement entered into with the Justice Department
  • for which a collection due process hearing is timely requested, or
  • for which collection has been suspended because a request for innocent spouse relief has been made.

IRS Certification

The IRS will certify to the State Department the identities of all taxpayers who owe seriously delinquent tax debts. The IRS is also required to notify you about the certification in writing. The form for this purpose is called Notice CP 580C. The IRS will send the written notice by regular mail to your last known address.

Upon receiving the certification, the State Department will deny your passport application or may revoke your current passport. If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States. Before denying a passport, the State Department will hold your application for 90 days to allow you to try to reverse the certification as described below.

How to Reverse the IRS Certification

The IRS will reverse a certification if:

  • the tax debt is fully paid or becomes legally unenforceable because the statute of limitations expired
  • the tax debt is no longer seriously delinquent, or
  • the certification is erroneous.

The IRS will make this reversal within 30 days and notify the State Department as soon as practicable. You'll then be able to obtain a passport.

The IRS will not reverse the certification if you only pay your debt below $50,000. You have to either settle or pay your entire delinquent tax debt. Thus, you must:

  • pay the entire balance due
  • enter into an installment agreement allowing you to pay the debt over time
  • get the IRS to accept an offer in compromise to satisfy the debt for less than the full amount due
  • enter into a settlement agreement with the Justice Department to satisfy the debt
  • request innocent spouse relief, or
  • make a timely request for a collection due process hearing in connection with a levy to collect the debt.

Alternatively, you can file suit in the U.S. Tax Court or a U.S. District Court to have the court determine whether the certification was erroneous or the IRS failed to reverse the certification when it was required to do so. If the court determines the certification is erroneous or should be reversed, it can order the IRS to notify the State Department that the certification was in error.

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