"Retain me, and
you will talk
only to me."
Section 7345 of the Internal Revenue Code requires the Treasury Department to notify the State Department if a certification is made that an individual has a “seriously delinquent tax debt.” Upon receipt of a certification, the State Department is required to deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual. The IRS and State Department will begin implementation of these provisions in January of 2018.
If the Treasury Department receives certification by the IRS that an individual has a seriously delinquent tax debt, such certification must be transmitted to the State Department for action with respect to denial, revocation, or limitation of a passport. A “seriously delinquent tax debt” is an unpaid, legally enforceable, and assessed federal tax liability of an individual, greater than $50,000, and for which:
- A notice of federal tax lien has been filed under and the tax-payer’s right to a hearing has been exhausted or lapsed; or
- A levy has been issued.
The $50,000 federal tax liability threshold is calculated by aggregating the total amount of all current tax liabilities for all taxable years and periods including penalties and interest assessed against an individual but does not include:
- A debt that is being timely paid under an IRS-approved installment agreement;
- A debt that is being timely paid under an offer in compromise accepted by the IRS;
- A debt that is being timely paid under the terms of a settlement agreement with the Department of Justice;
- A debt in connection with a levy for which collection is suspended because of a request for a due process hearing (or because such a request is pending); and
- A debt for which collection is suspended because the individual made an innocent spouse election.
The IRS is required to notify the State Department if the IRS reverses the certification because it is erroneous or if the debt with respect to such certification is fully satisfied, becomes unenforceable, or ceases to be a seriously delinquent tax debt.
An individual has the right to judicial review of whether a certification was erroneous or whether the IRS failed to reverse a certification in either a United States district court or the United States Tax Court. If a court determines that the certification was erroneous, the court may order the IRS to notify the Secretary of State that the certification was erroneous.