Got Unpaid Taxes? Your Passport May Soon be Revoked or Denied

The time is approaching when the IRS will begin certifying tax debt to the State Department, and if you’re not paid up, you may have to reschedule any travel plans.

In 2015, Congress passed tax code Section 7345, which authorizes the IRS to notify the State Department if you have seriously delinquent tax debt that should result in the denial, revocation, or limitation of a U.S. passport. The department generally will not issue or renew a passport to you after receiving certification from the IRS.

If this sounds like it can happen to you, it’s time to read up on the certification requirements and identify ways to keep your passport.

New tax debt information

Under section 7345, seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt totaling more than $50,000, where 1) a notice of federal tax lien has been filed and all administrative remedies under Section 6320 have lapsed or been exhausted; or 2) a levy has been issued.

However, there are some exceptions that may apply to tax debts that:

• Are being paid in a timely manner under an installment agreement with the IRS
• Are being paid in timely manner under an offer in compromise accepted by the IRS or a settlement agreement with the Justice Department
• Relate to a collection due process hearing that has been requested in a timely manner in connection with a levy to collect the debt
• Relate to a collection that has been suspended because a request for innocent spouse relief under Section 6015 has been made.

The IRS is required to notify you in writing at the time they certify seriously delinquent tax debt to the State Department, and notify you if there is any reversal or change.

How to keep your passport

Before denying a passport, the State Department will hold the application for 90 days, enough time to resolve any erroneous certification issues, make full payment or reach a payment agreement with the IRS. Unfortunately, there is no grace period for resolving the debt before the State Department revokes a passport.

The IRS will request a reversal of certification only when a tax debt is fully satisfied or becomes legally unenforceable, a tax debt is no longer seriously delinquent, and/or the certification is erroneous.

Contact me or another member of Kaufman Rossin’s international tax team with any questions about this new tax code.