Owing taxes can be stressful and overwhelming. If you are seriously delinquent in paying your taxes, you may be concerned that the IRS can place a lien against your property, levy your bank account, or seize your property to satisfy the debt. However, be aware that the Internal Revenue Service (the “IRS”) may also be able to prevent you from traveling internationally. Under the Fixing America’s Surface Transportation (FAST) Act of 2016, the IRS can issue a certification to the State Department to revoke your passport or deny your renewal application.
When Can the IRS Certify Tax Debt to the State Department?
The IRS has the authority to certify debt that is “seriously delinquent” to the State Department. Tax debt that falls into this category is unpaid, legally enforceable federal tax debt owed, including penalties and interest, amounting to more than $55,000 — the number is adjusted yearly to correspond with inflation. Prior to certification, a notice of federal tax lien must have been filed by the IRS and all administrative remedies provided by the law must be exhausted.
The IRS provides an exception in some instances. It will not certify tax debt to the State Department under the following circumstances:
- The taxpayer has entered into an installment agreement
- The taxpayer and the IRS entered into an offer in compromise
- The taxpayer timely requested a due process hearing
- Collection efforts have been suspended as a result of a request for innocent spouse relief
- The taxpayer filed for bankruptcy
- The taxpayer was a victim of tax-related identity theft
- The account is in “currently not collectible” status due to hardship
- The taxpayer is located within a federally declared disaster area
Certification will be postponed if the taxpayer is serving in the military in a combat zone or contingency operation.
What Happens if the IRS Certifies Tax Debt to the State Department?
Unless a taxpayer falls into one of the above exceptions, the IRS can proceed with issuing certification to the State Department for seriously delinquent tax debt. This certification means that you could be denied a passport if you apply for one for the first time, your renewal application could be refused, or your current passport could be revoked.
Under the FAST Act, a taxpayer is permitted to appeal their passport revocation in limited circumstances. If the certification was issued erroneously or the tax debt was paid in full, the certification should be reversed. Other scenarios that may warrant a reversal of certification include a taxpayer qualifying for an exemption, or in cases where the tax debt is no longer enforceable.
A passport revocation case can be filed in U.S. Tax Court if the IRS will not reverse the certification when required to do so. If the court determines that the certification was made in error, the Court can order the IRS to notify the State Department that it must be reversed. However, if the certification meets the necessary legal requirements, there may be no other alternative than to negotiate an agreement with the IRS.
Contact a Skilled New York Tax Attorney
If you owe the IRS a substantial amount of taxes and are facing passport revocation or other consequences, it is vital to consult with an experienced tax attorney. Providing dedicated counsel and knowledgeable representation, Brinen & Associates advises clients regarding their options and remedies for a wide variety of tax matters. Call (212) 330-8151 or send us a message to schedule a consultation.