The IRS Can and Will Revoke Your Passport
Here's what you need to know:
“Sorry, you can’t go through. Your passport is denied.”: Those are the LAST words you want to hear as you are about to fly internationally for a work assignment in London or a relaxing trip to Mexico.
When you have tax debt, you’re potentially putting yourself in that situation.
The IRS has connections.
Remember when they told you, “its not what you know but who you know”?
Same thing goes here.
In this case, though, it’s who the IRS knows, and the “who you know” is the U.S. Department of State!
Because when you owe “seriously delinquent” tax debt, the IRS notifies the U.S. Department of State about your bad behavior.
It’s called the IRS Passport Revocation or Denial Program.
Taxpayers all over the country are having their passports revoked or denied.
Losing your passport means losing your freedom.
For both taxpayers and tax professionals, understanding this issue, when and how it happens and what you need to do to resolve it is critical.
In this week’s Resolving Tax Debt newsletter, I take a look at four key points about the IRS passport revocation program:
The Definition of “Seriously Delinquent”
How you’re notified
Reversing the Certification
Expedited Reversal
1. What is “Seriously Delinquent” Tax Debt anyway?
The IRS can take your passport when you owe “seriously delinquent” tax debt.
What does that even mean?.
According to the IRS, “seriously delinquent” unpaid federal tax debt is an amount owed that exceeds $62,000, including penalties and interest.
The $62k threshold includes all taxes owed by you individually, including individual income taxes, but also trust fund recovery penalties, and business taxes where you’re personally liable.
2. The Notification Process
When the IRS decides your tax debt is “seriously delinquent," , they’re nice enough to send a notice.
Enter Notice CP508C.
But that’s all you get.
One letter.
The IRS doesn't send pre-certification notices to let you know that the CP508C notice is on its way.
This one letter is your official and only heads-up that your passport is about to be revoked or renewal denied.
If you miss it, you’re out of luck.
Even with professional representation, no one besides yourself will be notified.
Your Power of Attorney (POA) doesn't get a copy either, unlike most other IRS notices.
The responsibility is squarely on your shoulders to make sure you receive the letter, review it, get it taken care of, and/or notify your tax professional.
So, taxpayers, please open your mail and be on the lookout for Notice CP508C.
Otherwise, you might not know that your passport was revoked until it's too late and you’re in line at customs.
3. Reversing the Certification
Despite the seriousness of the consequences of this thing: you CAN fix the problem.
You must take care of what you owe.
You need to be in complete compliance with the IRS and have entered into an IRS approved resolution of your debts.
Resolutions include a formal installment agreement, an offer in compromise, or other settlement agreement with the Department of Justice.
Making voluntary payments doesn’t cut it.
The State Department should be notified immediately by the IRS once you resolve your balance, but that doesn't mean they always are or that it always gets processed right away.
So that’s comforting.
4. Expedited Reversal
Importantly, if you need a passport decertification reversal quickly because of travel plans that are already in place, the IRS may be able to help expedite the process from 30 days to approximately 9–16.
But there’s a process, rules you need to follow and specific requirements that must be provided and it’s still not a sure bet the reversal gets done in time.
You are dealing with the IRS, after all.
TL;DR
The IRS can revoke or deny your passport renewal if you owe a “seriously delinquent” debt defined as more than $62k.
You’re notified that your case has been sent to the State Department with a CP508C notice but it’s the only warning you’ll receive.
There are ways to protect yourself and reverse the decision, even expedite it, but full compliance and an IRS resolution are required, along with specific circumstances and required substantive documents.
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Make sure to understand the IRS's passport revocation program to protect yourself from losing your passport and the disaster that may be waiting ahead.
Your personal freedom is at stake!
Have You or a Client had Experience with this?
What did you do to resolve it?
Did you need the reversal expedited for an upcoming trip?
If so, were you able to get it resolved in time?
Tell us about it in the comments!
As always, thank you for your continued support!
