The Internal Revenue Service (IRS) has formally announced its intent to start enforcing its passport revocation powers against US persons who owe more than USD 51,000 in taxes and penalties.
The Fixing America’s Surface Transportation Act (FAST Act), signed into law in December 2015, requires the IRS to notify the US State Department of those taxpayers the IRS has certified as owing a “seriously delinquent tax debt”.
The State Department must then deny their passport application or renewal request, or even revoke an existing passport.
“Seriously delinquent tax debt” is classified by the IRS as “more than USD 51,000 in back taxes, penalties and interest, for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired, or the IRS has issued a levy.”
The IRS has given taxpayers various options through which they can avoid having the State Department notified of their tax debt, including:
- paying the tax debt in full;
- paying the tax debt timely under an approved installment agreement;
- paying the tax debt timely under an accepted offer in compromise;
- paying the tax debt timely under the terms of a settlement agreement with the Department of Justice;
- having requested or have a pending collection due-process appeal with a levy; or
- having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.
The service also lists those taxpayers who may be exempt under the FAST Act. If the State Department has been notified of a debt of a taxpayer who is later declared exempt, the IRS will notify the Department of the reversal of the certification.
In her 2017 Annual Report to Congress, released on January 10, 2018, National Taxpayer Advocate, Nina E. Olson, addressed the issue of passport denial and revocation and pointed out certain flaws.
Under the current procedure, the IRS sends a stand-alone notice to the taxpayer regarding the passport consequences at the same as certifying the debt as seriously delinquent, meaning that the taxpayer has no time to act before certification.
