Notice of Passport Action for Seriously Delinquent Debt

Understanding the IRS Notice of Passport Action for Seriously Delinquent Debt

The Internal Revenue Service (IRS) can take significant actions against taxpayers who have seriously delinquent debts. One such action is the restriction on passport issuance, a measure enacted under the Fixing America’s Surface Transportation (FAST) Act. This article explains the implications of receiving a Notice of Passport Action due to Seriously Delinquent Debt, the steps involved, and how you can resolve the situation.

What is a Seriously Delinquent Debt?

A Seriously Delinquent Debt, as defined by the IRS, refers to a taxpayer’s unpaid federal tax debt exceeding $54,000, including interest and penalties. This threshold is subject to annual adjustments for inflation. The IRS, under IRC § 7345, is required to certify such debts to the Secretary of the Treasury, who informs the State Department.

Implications of Receiving a Notice

When the IRS certifies your debt as seriously delinquent, the State Department may restrict your passport. This can include denial of a passport application or renewal. In some rare cases, your current passport may be revoked. IRS Code § 7345(b) outlines these actions.

How to Avoid Passport Revocation

• Paying the Debt in Full: The most straightforward method to resolve this issue is to pay off the balance, including any accrued interest and penalties.
• Setting Up a Payment Plan: Establishing an approved installment agreement under IRC § 6159 can ensure your debt does not qualify as seriously delinquent.
• Submitting an Offer in Compromise: If you qualify, the IRS might accept a negotiated amount less than the total debt you owe, as per IRC § 7122.
• Requesting Innocent Spouse Relief: This can relieve you of the responsibility of paying tax, interest, and penalties if certain conditions are met under IRC § 6015.

Steps to Take if You Receive a Notice

1. Confirm the Validity: Ensure that the notice is legitimate and review the details of your tax account statement.
2. Contact the IRS: Speak with an IRS representative to discuss potential resolution options for your tax situation.
3. Seek Professional Assistance: A tax professional or attorney can provide guidance tailored to your specific situation.
4. Take Action Promptly: Delays can exacerbate your financial situation and hinder your ability to use or obtain a passport.

State Department's Role and Process

Once notified, the State Department will not process a passport application or renewal until the IRS removes the certification of your seriously delinquent debt. The State Department, under 22 USC § 2714a, operates independently of the IRS and cannot make exceptions.

Appealing Against the Certification

You may contest the certification in court under IRC § 7345(e). This involves filing a lawsuit in U.S. Tax Court or a U.S. District Court to challenge the certification. However, engaging an attorney is advisable, as this process can be intricate.

Key Considerations

• Timely Communication: Correspond promptly with the IRS to prevent further penalties or actions.
• Evaluate Payment Options: Consider all options for settlement, including installment agreements, to prevent passport action.
• Professional Guidance: Utilize professional resources to navigate the complexities of tax regulations and certification disputes.

For more guidance on dealing with IRS notices and actions related to seriously delinquent debts, please visit our dashboard for professional assistance.