1. CONGRESS created a new code section called “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” The idea of this new law is to use travel to enforce tax collections. It was proposed and rejected in 2012. It was re-introduced in 2015, passed by Congress, and signed by President Obama. It’s taking foothold now under President Trump’s watch.
2. Simply put, the new law authorizes the State Department to revoke or deny passports to taxpayers with seriously delinquent tax debts.
3. Seriously delinquent tax debt is an individual’s legally enforceable federal tax debt totaling more than $50,000 (including interest and penalties) for which a Notice of Federal Tax Lien has been filed and all administrative remedies have lapsed or exhausted.
4. IRS does not have the power to seize passports so it notifies the State Department through a new process called certification of seriously delinquent tax debts. The State Department has not yet seized passports as of December 2017. Certifications are re-scheduled for January 2018.
5. IRS will send a notice to every person with seriously delinquent tax debt. CP508C (Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the State Department) advises you to take care of your tax obligations or suffer passport restrictions.
6. The IRS will provide certification to the State Department.
7. The IRS is also required to notify you in writing to your last know address at the time it sends your certification to the State Department.
8. Upon receiving certification, the State Department can deny your passport application or revoke your current passport. If you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.
9. The IRS will reverse your certification when:
• Your tax debt is fully satisfied or becomes legally unenforceable.
• Your tax debt is no longer seriously delinquent.
• Your certification is erroneous.
The IRS will get you off its naughty list within 30 days and provide notification to the State Department.
10. The IRS will not reverse your certification because you pay down your debt below $50,000. You have to reduce your debt before you are referred to the State Department.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].