Thursday, September 22, 2016


A taxpayer with a seriously delinquent tax debt may have his passport revoked.
If an individual is certified as having a seriously delinquent federal tax debt IRC section 7345 the IRS allows the IRS to notify the State Department of the delinquency and the State Department which will determine whether to deny, revoke, or limit that individual's passport.
A seriously delinquent tax debt means an unpaid legally enforceable federal tax liability of an individual that:
  1. has been assessed,
  2. exceeds $50,000, and
  3. as to which (a) a notice of lien has been filed under IRC section 6323 and the administrative rights under IRC section 6320 for that lien have been exhausted or have lapsed, or (b) a levy is made under IRC section 6331.
The threshold for notice in 2016 is $50,000. In calculating the $50,000 threshold, interest and penalties are included. For calendar years after 2016, the $50,000 amount will be adjusted annually for inflation by the cost-of-living adjustment.

A seriously delinquent debt does not include a debt that (1) is being paid in a timely manner under an installment or compromise agreement, and (2) for which a collection action is suspended because a collection due process hearing is requested or is pending or innocent spouse relief has been requested.

The IRS must notify the State Department if its certification is found to be erroneous, or the relevant debt is fully satisfied or ceases to be a seriously delinquent tax debt under the above exceptions. This decertification is limited to the taxpayer who is the subject of one of the above actions. Decertification can occur from a claim for innocent spouse relief. The notification must be made not later than the date required for issuing the certificate of release of lien for the debt. Notification must be made:
  1. not later than 30 days after an innocent spouse relief election or request for equitable relief;
  2. not later than 30 days after an installment agreement is entered into or an offer in compromise is accepted by IRS;
  3. as soon as practicable after finding that a certification is erroneous.
The IRS must notify the taxpayer if it sends a certification to the State Department or if that certification is reversed. That notice must inform the individual of his right to bring a civil action in a U.S. district court or the Tax Court. A court that determines that the certification is erroneous may order the Treasury to notify the Secretary of State of the error.

The IRS is not the only public agency to use special measures to enforce collection of tax debt. In 2013 New York passed legislation to allow a driver license to be suspended when a taxpayers past-due tax liability exceeds $10,000. Under the law those taxpayers have 60 days to respond before receiving a second notice, allowing 15 more days to respond. If taxpayer again fails to arrange payment, his or her license is suspended until the debt is paid.