May 26, 2020

Is Your Passport Subject to Revocation Because of Tax Debt?

Under the Fixing America's Surface Transportation (FAST) Act, the IRS can notify the State Department when taxpayers owe a seriously delinquent tax debt. If the IRS certifies a taxpayer's debt as "seriously delinquent" to the State Department, the State Department can deny the taxpayer's application for a passport or a renewal, or can revoke an existing passport. In addition, the IRS can request that the State Department consider revoking a US passport of a certified individual. If you have a seriously delinquent tax debt, you must act promptly to potentially avoid certification of your tax debt. 

On August 8, 2019 the IRS issued News Release 2019-141 urging taxpayers to resolve their significant tax debt to avoid putting their passports in jeopardy.

Under the Internal Revenue Code, a seriously delinquent tax debt is an unpaid, legally enforceable tax liability of an individual totaling more than $50,000 which has been assessed, AND

  • a notice of federal tax lien (NFTL) has been filed and remedies under 6320 have lapsed or been exhausted, OR

  • a levy has been made pursuant to 6331.

The $50,000 is indexed for inflation, so the threshold is currently $52,000. This amount is based on the assessed balance and does not include accruals on the account. The debt can include assessments made under an individual taxpayer's SSN or EIN, such as 1040 taxes, trust fund recovery penalties (TFRP), business taxes for which an individual is personally liable and other civil penalties. It does not include SRP assessments, criminal restitution assessments or FBAR penalties.

Even if the debt meets these criteria under the statute, there are statutory and discretionary exceptions that could apply that would prevent or delay the debt being considered as seriously delinquent. Those exceptions include entering into various collection alternatives, including installment agreements, offer in compromise or currently not collectible due to hardship. In addition, having a pending collection due process appeal or a pending request for innocent spouse relief can also prevent or delay the certification of the tax debt. There are also other avenues to protect your passport and to resolve your tax debt.

© 2020 Varnum LLP


About this Author

Angelique Neal Tax Attorney

Angelique is a member of Varnum’s Tax Team. Her practice includes all aspects of federal and state tax controversy and tax planning, including: tax audits, appeals, and litigation; tax collections – liens, levies, offers in compromise, and other collection alternatives; employment tax issues; and civil and criminal tax litigation. In addition, she handles tax and reporting compliance issues with offshore financial accounts and other assets. She represents individuals and business clients from small businesses to multimillion dollar corporations, including clients with overseas interests....