U.S. Passport Revocation: The New IRS Enforced Collection Weapon
Bonnie is an Amazing Race superfan recently selected to participate in the upcoming season of the reality TV show. Contestants are required to have a valid U.S. passport and submit their passports to obtain visas for the countries that may be visited during filming. Our fictitious character, Bonnie, subsequently received IRS Notice CP508C informing her that the State Department had revoked her passport.
Bonnie's devastation is courtesy of the IRS and State Department implementing in January 2018 provisions of the 2015 Fixing America's Surface Transportation (FAST) Act to deny issuance or renewal of a passport to taxpayer’s owing more than $50,000 in delinquent taxes (adjusted for inflation). The law also allowed the State Department to revoke or limit a passport previously issued to a delinquent taxpayer living overseas allowing only for direct return to the United States.
"IRS collects $1.2 billion in less than two years from taxpayers with the passport revocation program who the IRS certified to the State Department as being seriously delinquent in their tax debt."
Internal Revenue Service
What is the current delinquent tax threshold?
- The tax delinquency threshold for 2022 is $55,000
Note: The IRS will not reverse the passport certification just because you pay the debt below the threshold
What tax debt does the IRS certify to the State Department?
The IRS certifies seriously delinquent tax debt to the State Department. Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt (including interest and penalties) totaling more than $55,000 (adjusted yearly for inflation) for which a:
- Notice of federal tax lien has been filed and all administrative remedies under the law have lapsed or have been exhausted, or
- Levy has been issued.
What type of taxes are included?
- U.S. individual income taxes
- Trust Fund Recovery Penalties
- Business taxes for which the individual is liable
- Other civil penalties
What tax debt does the IRS not certify to the State Department?
Some tax debt is not included in seriously delinquent tax debt such as:
- Report of Foreign Bank and Financial Account (FBAR) penalty
- Child support
- A debt that is being timely paid under an IRS-approved installment agreement under IRC section 6159;
- A debt that is being timely paid under an offer in compromise accepted by the IRS under IRC section 7122;
- A debt that is being timely paid under the terms of a settlement agreement with the Department of Justice under IRC section 7122;
- A debt in connection with a levy for which collection is suspended because of a request for a due process hearing (or because such a request is pending) under IRC section 6330; and
- ·A debt for which collection is suspended because the individual made an innocent spouse election (IRC section 6015(b) or (c)) or the individual requested innocent spouse relief (section 6015(f)).
In addition, the IRS will not certify anyone as owing a seriously delinquent tax debt:
- Who's in bankruptcy,
- Who's identified by the IRS as a victim of tax-related identity theft,
- Whose account the IRS has determined is currently not collectible due to hardship,
- Who's located within a federally declared disaster area,
- Who has a request pending with the IRS for an installment agreement,
- Who has a pending Offer in Compromise with the IRS, and
- Who has an IRS accepted adjustment that will satisfy the debt in full.
Are members of the US Military exempt?
No. The IRS will postpone certification only while an individual is serving in a designated combat zone or participating in a contingency operation.
When will the IRS recommend revocation of a passport?
The IRS may ask the State Department to exercise its authority to revoke your passport. For example, the IRS may recommend revocation if the IRS had reversed your certification because of your promise to pay, and you failed to pay. The IRS may also ask the State Department to revoke your passport if you could use offshore activities or interests to resolve your debt but choose not to.
Before the IRS sends a revocation referral to the State Department, the IRS will send you Letter 6152 asking you to call the IRS within 30 days to resolve your account to prevent this action.
When will the IRS reverse the certification?
The IRS will send a taxpayer Notice CP508R at the time it reverses certification. The IRS will reverse a certification when:
- The tax debt is fully satisfied or becomes legally unenforceable,
- The tax debt is no longer seriously delinquent, or
- The certification is erroneous.
The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practicable.
The IRS will not reverse certification if your request for a collection due process hearing or innocent spouse relief is on a debt that's not certified. Also, the IRS will not reverse the certification because you pay the debt below the threshold.
Passport status
The State Department will notify you in writing, if the State Department denies your U.S. passport application or revokes your U.S. passport.
If you need your U.S. passport to keep your job, once the IRS certifies your seriously delinquent tax debt to the State Department, you must fully pay the balance or make an alternative payment arrangement to have your certification reversed.
Conclusion
Do not wait to resolve outstanding IRS issues! The FAST Act will wreak havoc on taxpayers owing the IRS at least $55,000 that need to apply for or renew their U.S. passport to keep their jobs or have imminent foreign travel planned.
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About the Author
Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.
In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA
Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.
Copyright 2023 Mark Sullivan Consulting, PLLC; Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®
[i] IRS Rev. Proc. 2011-47 (most recently superseded by 2017-42) & IRC 162(a)(2); Reg 1.162-2) A tax deduction is allowed for ordinary and necessary traveling expenses incurred by a taxpayer while away from home in the conduct of a trade or business. A truck driver is not away from home unless his or her duties require the individual to be away from the general area of his or her tax home for a period substantially longer than an ordinary workday and it is reasonable to need rest or sleep.
[ii] Rev. Ruling 75-432
[iii] HATEM ELSAYED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 8935-07S. Filed May 26, 2009
