U.S. citizens who owe more than $50,000 in unpaid federal taxes are at substantial risk of having their U.S. passports revoked within the next few months. In December 2015, Congress enacted legislation requiring the IRS to provide a list of names to the State Department of individuals with “seriously delinquent tax debt.”¹ That term was defined in the statute to mean tax debt of over $50,000, including interest and penalties. 26 U.S.C. § 7345(b). The legislation also requires that the State Department refuse to issue new passports and gives the State Department discretion to revoke currently issued passports. See 22 U.S.C. § 2714A.
Last week, the IRS announced that it would begin sending, within 30 days, IRS Letters 508C, notice of certification of seriously delinquent federal tax debt to the State Department, to the taxpayer’s last-known address. The letter will inform the taxpayer that the IRS has certified him/her as owing “seriously delinquent tax debt.” At that time, the IRS will also send the certification to the State Department.
The IRS reports that the State Department will take action within 90 days. Taxpayers who have a tax debt can only avoid passport revocation if the taxpayer pays the tax in full or enters into an installment agreement or an offer in compromise with the IRS. Taxpayers who have made a timely request for collection due process hearing can also avoid revocation while the hearing is pending. Of particular note, the 2015 legislation severely limits the right of an individual to appeal the IRS’s and State Department’s decision, so individuals who have substantial tax debt will have to come into compliance.
- Section 32101 of Fixing America’s Surface Transportation (the “FAST”) Act, Pub. L. 114–94.