According to the IRS, “Seriously Delinquent Tax liability” refers to those with unpaid federal tax liability equaling more than $51,000. This amount includes all penalties and interest. The IRS would have filed a notice of federal tax lien for this individual, and all collection attempts must be exhausted such as levy and garnishments.
Those who have what the IRS refers to as “Seriously Delinquent Tax Liability” may face the revocation of their passport.
According to the IRS, “Seriously Delinquent Tax liability” refers to those with unpaid federal tax liability equaling more than $51,000. This amount includes all penalties and interest. The IRS would have filed a notice of federal tax lien for this individual, and all collection attempts must be exhausted such as levy and garnishments.
Effective January 2018, the IRS published procedures that allow officials to enforce Internal Revenue Code section 7345. This section gives the authority to the State Department to deny applications for a passport for those who have delinquent liabilities. This policy also includes the revocation of your current U.S. passport.
Some tax liabilities may be more than $51,000 but are not considered seriously delinquent. For example, revocation of a passport will not occur if the taxpayer has an active IRS-approved installment agreement and is current with the payment terms. The State Department cannot deny an application or revoke someone’s passport if an offer in compromise has been the field or accepted by the IRS. In addition, if a hearing for a levy has been scheduled or collection of the liability suspended.
Passports may also not be at risk for those who fall within certain circumstances, which caused them the inability to pay their tax liability. These circumstances may include being a victim of tax-related identity theft, filing bankruptcy, being determined not collectible due to economic hardship, or located in a federally declared disaster area.
Should a taxpayer be affected by a revocation of passports, they will be notified by the IRS and the State Department in writing. This notice will be sent to the last known address of the taxpayer. The passport application will be held for 90 days, giving the individual time to resolve the matter. Also, it gives time to pay the tax liability in full or set up an installment agreement with IRS.
Those traveling overseas should not worry about being stranded in a foreign country. Should a revocation of a passport occur while overseas, the State Department has the authority to issue a limited validity passport. This passport is only valid for direct return to the United States.
Individuals who plan to travel outside of the United States with seriously delinquent tax liability should reach out to the IRS. Coming up with a plan before traveling will help prevent any issues with passport revocation before or during traveling. Those taxpayers who struggle with the thought of having their passports revoked may want to seek out the assistance of a tax professional who specializes in tax resolution. A tax expert can help prevent the revocation of passports or get a reversal of certification if the passport has already been revoked.
The IRS will send a reversal of certification to the State Department if the entire tax bill was paid in full, the liability becomes legally unenforceable, or no longer seriously delinquent. In some situations, the IRS may deem the revocation was in error and will be required to send a reversal of certification to the State Department. The IRS will make this reversal within 30 days.
Contact the IRS or tax professionals like us at Coast One Tax Group as soon as you receive a notice.
