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Rules on passport restrictions for back taxes moving forward

On Behalf of | Jan 18, 2018 | Blog

It has been more than two years since legislation passed giving the IRS an additional collection tool. The tax agency will soon begin working in conjunction with the State Department to revoke, limit or deny passports of individuals with “seriously delinquent tax debt.”

This month the IRS will start notifying the State Department of these taxpayers who owe the IRS more than $51,000. This amount includes back taxes, penalties and interest with a lien or levy.

International travel: Keeping your passport safe

Facing significant tax debt is more important than ever. We have been closely following this issue to see when the IRS would take action against passports, and now the procedures are in place for implementation.

Exclusions to the seriously delinquent tax debt category exist in the following cases:

  • Timely debt repayment is occurring through an IRS-approved installment agreement
  • An accepted offer in compromise addresses the back tax debt
  • Debt is being resolved through terms of the Department of Justice settlement agreement
  • Innocent spouse relief has been requested and/or granted
  • Collection through a levy has been suspended for a due process hearing

Discussing these options with a tax attorney is a first step to ensuring your passport remains valid for upcoming international travel.

Notice requirements

No passport revocation or passport application denial will occur without notice. The IRS must send notice to a taxpayer at the same time it sends certification or reversal of certification to the State Department. This form, CP508C, is supposed to contain simple nontechnical terms, but this is tough when tax law is involved.

Once the State Department receives a certification, it is unclear how quickly action will be taken. Along the same lines, the timing to obtain a reversal and have it filed could mean weeks or months without a passport. The guidance for filing a reversal says “as soon as practicable,” but this could take time especially with multiple federal agencies involved.

Be proactive. Seek legal counsel now if an outstanding tax debt has grown to more than $50,000. Penalties and interest could make up a good percentage and options exist to attempt to lower it or at least start on the path toward a long-term solution.

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