A "seriously delinquent tax debt" will affect the ability of a U.S. citizen to use, or apply for, a passport.
Section 7345 of the Internal Revenue Code ("IRC") permits the Secretary of State to deny, revoke or limit a citizen's passport upon receipt of a certification from the Commissioner of Internal Revenue Service ("IRS") that the citizen has a seriously delinquent tax debt. Though IRC §7345 was enacted in 2015, the IRS and State Department began implementing these rules in January of 2018.
There are many exceptions and special circumstances that must be considered in order to determine whether a debt is a "seriously delinquent tax debt." However, in general, a "seriously delinquent tax debt" is an individual's assessed, unpaid, legally enforceable federal tax debt totaling more than $50,000 (including interest and penalties, and adjusted annually for inflation) for which a: (i) notice of federal tax lien has been filed under IRC §6323 and all administrative rights under IRC §6320 have lapsed or been exhausted or (ii) levy has been made under IRC §6331.
The IRS is required to provide written notice to the affected citizen at the time that the IRS certifies the seriously delinquent tax debt to the State Department. What happens next depends on a number of factors. Generally, the State Department provides the citizen with 90 days to resolve the tax delinquency (e.g. by paying the tax owed in full, entering into an installment agreement, making an offer in compromise, or notifying the IRS that the certification was issued in error).
The IRS will reverse the certification once the tax debt is paid, becomes legally unenforceable, is no longer seriously delinquent, or if the certification was issued in error. The IRS is required to provide written notice to the affected citizen and the State Department at the time it reverses the certification. Absent resolution and reversal of the certification, the passport will be revoked or the passport application will be denied. Note that simply paying the debt below $50,000 will not result in reversal of the certification and that a seriously delinquent tax debt of one spouse could cause the other spouse to have his/her passport denied or revoked as well if no action is taken.
In most cases, citizens are required to present a passport to re-enter the U.S. after international travel. Some citizens rely on their passports as acceptable identification for domestic travel as well, including residents of those states that do not have TSA-compliant drivers' licenses. Passport revocation can cause substantial delays and associated travel headaches, which is likely the reason why passport revocation is seen as an effective method of "encouraging" the payment of seriously delinquent tax debt.
The sole remedy for a wrongful certification or failure to reverse a certification is to file a civil action. Tax counsel should be consulted as soon as possible to work with the IRS to resolve an accumulating tax liability. In addition, any citizen who receives an IRS notice indicating that a certification of seriously delinquent tax debt has been made to the State Department would be well-advised to consult with immigration counsel before embarking on that next international trip.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
