The Internal Revenue Service and State Department anticipate revoking and denying passports to Taxpayers with "Seriously Delinquent Tax Debt" beginning in January 2018.
Under the FAST Act, signed into law by President Obama December 4, 2015, Taxpayers with Seriously Delinquent Tax Debt may have the State Department deny their passport application or revoke their current passport.
What is A Seriously Delinquent Tax Debt?
A federal tax debt is considered to be a Seriously Delinquent Tax Debt when the debt is unpaid, is a legally enforceable federal tax liability, of an individual, which has been assessed, is greater than $50,000, and when a notice of lien has been filed and Collection Due Process hearing rights have been exhausted or lapsed, or a levy has been made under IRC §6331.
In plain language, if you owe the IRS more than $50,000 and a lien or levy has been issued to collect that balance due, then your federal tax liability may be classified by the IRS as Seriously Delinquent Tax Debt.
What Exceptions and Exclusions Are Available to Taxpayers?
Having a tax liability that meets the above terms does not necessarily mean your tax liability will be classified as a Seriously Delinquent Tax Debt. The statute has
exceptions
from this classification for debts being paid timely through an Installment Agreement or Offer in Compromise, debts for which collection action is suspended pending a Collection Due Process hearing, or when collection action is suspended pending a request for Innocent Spouse Relief.
Additionally,
exclusions
have been created by the IRS for tax debts classified as Currently Not Collectible, resulting from identity theft, belonging to a Taxpayer in a disaster zone, when the Taxpayer is in bankruptcy, when the Taxpayer has a pending Offer in Compromise or Installment Agreement, and when there is a pending claim and the resulting adjustment will result in no balance due.
IRS Certification of Seriously Delinquent Tax Debt
If your tax liability qualifies as Seriously Delinquent Tax Debt and if an exception or exclusion does not apply, then the IRS may certify the tax debt as seriously delinquent. The IRS is required to provide you with written notice that you tax debt has been certified as seriously delinquent. Before or after receiving written notice you can work with the IRS to qualify under one of the exceptions or exclusion, see above, or file suit in the U.S. Tax Court or a U.S. District Court to have the court determine if the certification was made in error or if the IRS fails to timely release a certification.
State Department Passport Denial or Revocation Process
After receiving certification from the IRS, the State Department must deny passport application or may revoke your current passport. If your passport application is denied or your passport is revoked, the State Department will notify you in writing. If you require your passport to keep your job or for any other reasons, you must pay in full the balance due to the IRS or make another arrangement for repayment of the liability. Once you have resolved the underlying tax problem with the IRS, the IRS will reverse the certification within 30 days and provide notice to the State Department.
Resolutions Available to Taxpayers
If your passport application has been denied, your passport has been revoked, or you believe you are at risk for certification by the IRS, then you must take action to resolve the underlying IRS balance due. If full payment of the balance due is not possible, then you must establish an Installment Agreement, have your account placed in Currently Not Collectible Status, obtain an Offer in Compromise, request Innocent Spouse Relief, or file a request for a Collection Due Process Hearing.
Sources:
Revocation or Denial of Passport in Case of Certain Unpaid Taxes
. Internal Revenue Service. January 9, 2018.