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Traveling abroad can be essential for various reasons, including business endeavors, vacations, or visiting family and friends. In recent years, the IRS has increasingly used its authority to revoke or deny passport privileges for taxpayers with significant tax debt. This measure can have severe consequences for individuals who rely on their ability to travel internationally. Understanding the IRS Passport Revocation Program and the necessary steps to retain or reinstate your passport privileges is crucial for taxpayers with outstanding tax liabilities.
In this comprehensive blog post, we will delve into the details of the IRS Passport Revocation Program, which grants the IRS the power to revoke or deny passports for taxpayers with “seriously delinquent” tax debt. We’ll help you understand the program’s nuances, including the classification of “seriously delinquent” tax debt, the certification and notification process, and the resolution options available to taxpayers facing potential passport revocation or denial.
Moreover, we’ll emphasize the significance of seeking professional guidance from experienced tax attorneys who can expertly navigate the complexities of tax law and work with you to address your tax debt. As trusted advisors in tax law matters, Segal, Cohen & Landis’ tax attorneys can devise tailored strategies for clients facing potential consequences under the IRS Passport Revocation Program, helping to relieve the stress and uncertainty associated with unresolved tax debt and potential passport revocation.
Understanding the IRS Passport Revocation Program
Introduced as part of the Fixing America’s Surface Transportation (FAST) Act in 2015, the IRS Passport Revocation Program enables the IRS to coordinate with the U.S. State Department to revoke, limit, or deny passports for taxpayers with severely delinquent tax debt. This initiative forms part of the IRS’s efforts to enforce tax compliance and recover outstanding tax liabilities. To ensure a comprehensive understanding of the program, it is essential to explore the following aspects:
Identifying “Seriously Delinquent” Tax Debt
The IRS defines “seriously delinquent” tax debt as an unpaid, legally enforceable federal tax liability, which:
- Exceeds $50,000 (adjusted annually for inflation), including penalties and interest
- Has resulted in the IRS filing a Notice of Federal Tax Lien, and the appeal rights for the lien have been exhausted or lapsed
- Has led the IRS to issue a levy notice to collect the outstanding debt
However, tax debt may not be considered seriously delinquent if:
- The tax liability is being paid via an approved installment agreement or Offer in Compromise (OIC)
- The taxpayer has requested innocent spouse relief by filing Form 8857
- The taxpayer has requested a Collection Due Process (CDP) hearing in response to a levy notice
Certification and Notification Process
Once the IRS identifies a taxpayer as having seriously delinquent tax debt, the agency will certify their debt and notify the U.S. State Department. Additionally, the IRS will send the taxpayer a written Notice CP508C, explaining the certification and outlining their rights and next steps in resolving their tax debt and reversing the certification. It is critical to act promptly upon receiving such a notification to minimize the risk of passport revocation or denial.
Exploring Resolution Options
Taxpayers with seriously delinquent tax debt have several avenues available to address their financial obligations and preserve their passport privileges. These options include:
- Installment Agreements
An installment agreement is an arrangement between the taxpayer and the IRS, whereby the taxpayer agrees to pay a specific amount each month until their tax debt is fully paid. Upon approval of the installment agreement, the IRS will consider the tax debt to be resolved, thereby negating the seriously delinquent tax debt classification, and informing the State Department accordingly.
- Offers in Compromise
An Offer in Compromise (OIC) is an agreement that enables the taxpayer to settle their tax debt for less than the full amount owed. The IRS will consider an OIC if there is doubt regarding the taxpayer’s ability to pay the liability in full or if the full payment would cause the taxpayer financial hardship. The submission and acceptance of an OIC will suspend the certification of seriously delinquent tax debt.
- Appealing the Certification
Taxpayers who believe they have been wrongly certified as having seriously delinquent tax debt may file a suit in the U.S. Tax Court or District Court. The court will then review the certification and determine whether the IRS’s decision was erroneous. If the court finds in favor of the taxpayer, the IRS will reverse the certification, ensuring passport privileges remain unimpaired.
The Role of Tax Attorneys in Resolving Passport Issues
Navigating the complexities of tax law and resolving seriously delinquent tax debt can be a daunting task. That’s where the expertise of tax attorneys comes into play. Skilled in tax law and negotiation, tax attorneys offer numerous benefits to individuals grappling with passport revocation or denial, including:
- Thorough evaluation of your unique tax situation, ensuring you understand the implications of seriously delinquent tax debt and its impact on your passport privileges
- Expert guidance on the most suitable debt resolution options, such as installment agreements or Offers in Compromise
- Representation before the IRS, ensuring your case is presented accurately and effectively
- Assistance with filing appeals and fighting unjust certification
The IRS Passport Revocation Program presents a potential challenge for taxpayers with seriously delinquent tax debt. Understanding the program’s scope, determining the most effective debt resolution strategies, and seeking guidance from experienced tax attorneys can significantly improve your chances of resolving tax issues and safeguarding your passport privileges.
If you’re concerned about the IRS Passport Revocation Program and its impact on your international travel abilities, reach out to Segal, Cohen & Landis’ team of skilled tax attorneys for a free consultation. Let us help you navigate the complexities of tax law, resolve your tax debt, and ensure your passport privileges remain secure.