IRS Can Revoke/Deny Passports

A law has been adopted that permits the IRS to seek the denial or revocation of a citizen's passport when that person owes a "seriously delinquent tax debt." The FAST Act accomplishes this by adding Section 7345 to the Internal Revenue Code. The new Section 7345 authorizes the Secretary of the Treasury to certify to the Secretary of State that a taxpayer has a "seriously delinquent tax debt," at which point the Secretary of State can deny a passport application by that taxpayer or revoke a passport already issued.

This is new ground in tax enforcement for the IRS.  It will make it harder for taxpayers with serious tax problems to flee the country. However, we think Congress was far more concerned with getting a delinquent taxpayer's attention. Here's why:

A "seriously delinquent tax debt" is defined as one in excess of $50,000, for which the taxpayer has already been notified of their Collection Due Process rights ( i.e. a "Final Notice of Intent to Levy" has already been issued), or a debt on which the IRS has already issued levies. Exceptions exist for balances: a) that are being paid through an installment agreement; b) for which a Collection Due Process hearing is pending; or c) for which an innocent spouse claim has been filed. With those exceptions, the law's teeth will sink only into those taxpayers who have been issued many notices and continue to ignore their tax debts. Those that respond by requesting a hearing, requesting innocent spouse relief, or who set up a payment plan and make the required payments, will not be subject to the passport revocation or denial provisions.

There are two other provisions that demonstrate that Congress is trying to whack recalcitrant taxpayers into addressing their tax problems. First, the IRS must notify the taxpayer directly of the certification to the Secretary of State. These taxpayers will get a letter from the IRS stating that it has notified the State Department and you're going to have your passport revoked.   Second, if the delinquency ceases to be a "seriously delinquent tax debt," meaning it is reduced to under $50,000 or falls into one of the exceptions, e.g. it is covered by a payment plan, then the certification can be reversed. In other words, the law is such that the IRS can let  you  have your passport back, once you enter into a payment plan for what you owe."

Bowman Law Firm, Huntsville, Alabama