Can The IRS Revoke Your Passport Without Notifying You? Yes, It Can!
If you’re planning to apply for a passport for that much-awaited foreign trip, you better check whether or not all your taxes are clear and you’re in the good books of the IRS. Why so? Well, because the IRS holds the power to revoke your passport if you owe a “Seriously Delinquent Tax Debt”.
In 2016, the Congress felt that the penalties and interests being charged from taxpayers weren’t enough to spur payments from them and hence, it created and passed the Fast Act that can prevent the renewal of passport or revoke existing passports of those individuals who owed the Seriously Delinquent Tax Debt – a tax debt that exceeds $51,000. Although in the Fast Act statute the tax debt ceiling is stated as $50,000, for 2018, it stands corrected at $51,000 as it has been being indexed for inflation.
After being dormant for nearly two years, the IRS began enforcing this act since January 2018. Much to everyone’s surprise and contrary to initial reports that the IRS would bring about these changes gradually, the latest reports show that the IRS is issuing 100,000 certifications every month! Going by this pace, this rule could adversely impact as many as 3,62,000 Americans by the end of the year.
Seriously Delinquent Tax Debt is constrained by the liabilities sustained under Title 26 of the United States Code and does not include debts like FBAR penalties and Child Support. With the exception of these two debts, it includes all other kinds of penalties and interests.
To enforce the Seriously Delinquent Tax Debt, the IRS has to:
- File a notice of Federal Tax Lien. (The individual against whom the certification of the Seriously Delinquent Tax Debt is being issued must have exhausted all the rights under IRC Section 6320).
- Issue a tax levy.
Exceptions To The Rule
An individual can defend himself/herself by demonstrating that the tax debt falls under one among the following ten conditions:
- If a taxpayer is bankrupt.
- If the IRS has identified a taxpayer as a victim of tax-related identity theft.
- If a taxpayer hails from a federally proclaimed disaster zone.
- If a taxpayer has requested the IRS for an installment agreement and it is pending.
- If a taxpayer is in possession of an IRS accepted adjustment that can satisfy his/her total debt.
- If a tax debt has been declared as CNC (Currently Not Collectible).
- If a taxpayer pays his/her tax debt in a timely manner in an IRS accepted compromise or in a settlement agreement with the Department of Justice.
- If a taxpayer pays his/her tax debt in a timely manner in an installment agreement approved by the IRS.
- If a tax debt collection remains suspended due to a request made for innocent spouse relief under IRC Section 6015 is pending.
- If a collection due process hearing for a levy has been timely requested for a tax debt.
The Revocation Process
If the IRS determines an individual’s tax debts as ‘seriously delinquent’, it will certify the tax debt to the Secretary of State. It is the Secretary of State who will then revoke the passport after reviewing the IRS’ certification of the Seriously Delinquent Tax Debt. And although the Internal Revenue Manual Section states that the Secretary of State will not revoke a passport for at least 90 days to provide a window to the taxpayer time to resolve certification issues, this time period isn’t enough for the IRS to address all the issues.
The IRS will issue a Notice CP 508C addressed to the taxpayer at the time the debt has been certified. However, you should know that the IRS will send the notice to your last known address via regular mail and not certified mail. The sad thing is that by the time you receive the IRS’ notice, it will be too late to fix things as you’ve to go through an elaborate process which will inevitably cause further delay.
The new law has received the criticism of many tax advocates on the grounds that the IRS is not correctly administering the IRC Section 7345 by not notifying the taxpayers or their tax representatives, it still remains to be seen if the IRS will make any amends to set this straight.
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