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IRS issued Guidance on revocation or denial of passports

Posted by: Zaher Fallahi
Posted On: Jan 29, 2018

IRS issued Guidance on revocation or denial of passports to taxpayers with serious delinquent tax debt.

In a new Notice, IRS has provided guidance for implementing the new law, which requires the IRS to notify the State Department of taxpayers certified to have “seriously delinquent tax debt (SDTD).” Upon receipt of such notification, the State Department is required to deny passport application for these taxpayers, and revoke or impose limitation on previously issued passports, effective January 1, 2016.  Having a “SDTD” is basis for denial, revocation, or limitation of a passport, effective Jan. 1, 2016 (subject to exceptions).

An SDTD refers to an assessed tax liability of more than $50,000 (indexed for inflation) and for which a notice of lawful lien has been filed.  However, it does not include the following situations:

 

(a) When there is an agreement in place to repay the debt under, or ;

(b) Collection is suspended because of a collection due process hearing,  or;

(c) Spouse has sought relief under “innocent spouse relief”; and,

(d) The certification of an SDTD will be delayed while a taxpayer is serving in a combat zone, or participating in a contingency operation.

The law provides procedures for, and restrictions on, IRS’s disclosure of the return information for purposes of passport revocation, as well as, how an SDTD certification gets reversed.

In case of an exception, the State Department will not be notified that the taxpayer has a SDTD and therefore the provision on denial of a passport of or revocation of a passport will not apply. In addition, if after the State Department has been notified of a SDTD certification, the IRS determines that the tax debt should not have been certified, IRS will notify the State Department that the certification has been reversed.

Upon receipt of a notice from IRS regarding reversal of the certification, the State Department is required to remove the certification from the taxpayer’s record.  When a certified taxpayer applies for a passport, the State Department, will give applicants 90 days to resolve their problem. If a taxpayer needs their passport to travel within those 90 days, the taxpayer must contact IRS and resolve the matter within 45 days from the date of application to provide the IRS has adequate time to notify the State Department.

Generally, the only solution for a taxpayer who believes his or her certification is wrong, is to file a lawsuit in court. It should be noted that the taxpayer may not go to IRS Appeals to challenge the certification or the IRS’ decision. However, the taxpayer may contact the phone number in the Notice CP508C to request reversal of the certification if she or he believes it to be erroneous.

Zaher Fallahi, CPA, Tax Attorney, assist taxpayers including Americans living abroad, in resolving their tax problems and undisclosed foreign bank accounts; FBAR, FATCA and Offshore Voluntary Disclosure Program (OVDP).  Telephones: (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), e-mail [email protected]