Understanding the IRS Notice of Passport Action for Seriously Delinquent Debt

Understanding the IRS Notice of Passport Action for Seriously Delinquent Debt

In recent years, the Internal Revenue Service (IRS), in collaboration with the Department of State, has taken significant steps to enforce tax compliance among U.S. citizens holding seriously delinquent tax debt. One of these measures is the issuance of a Notice of Passport Action for Seriously Delinquent Debt. This article provides an in-depth look at this notice, potential implications, and actionable steps to resolve the issue.

What is a Notice of Passport Action?

A Notice of Passport Action is a notification issued by the IRS to individuals whose tax debt has been certified as seriously delinquent. According to Section 7345 of the U.S. Tax Code, seriously delinquent tax debt is defined as an unpaid, legally enforceable federal tax debt totaling more than $55,000, including interest and penalties, for which a lien or levy has been issued.

How Does the Process Work?

The IRS regularly assesses taxpayers' accounts to identify those with seriously delinquent tax debt. Once identified, the IRS certifies these taxpayers to the Department of State, which can then take action regarding their passports. This includes denying passport applications or renewals and even revoking an existing passport in certain circumstances.

IRS Citations and Legal Framework

The legal authority for the IRS to take such actions is embedded in several key pieces of legislation:

• Section 7345 of the U.S. Tax Code: Defines the term 'seriously delinquent tax debt' and outlines the IRS’s process for certification to the State Department.
• Internal Revenue Code Section 6321 and Section 6331: Relate to the imposition of liens and levies, respectively, which can trigger a seriously delinquent tax debt status.
• Fixing America's Surface Transportation (FAST) Act: Enacted in December 2015, this act gives the IRS the authority to work with the State Department to enforce passport restrictions.

What Can Taxpayers Do?

Receiving a Notice of Passport Action can be overwhelming, but there are several steps taxpayers can take to rectify the situation:

• Contact the IRS Immediately: Reach out to the IRS to understand the specifics of the debt and available resolutions.
• Set Up a Payment Plan: Consider payment plan options such as an Installment Agreement or an Offer in Compromise (OIC) to manage the debt.
• Resolve with Collections: If your account is with a private collection agency, communicate promptly to resolve the outstanding debt.
• Check for Certifications: Confirm the IRS has certified your debt to the State Department. Errors can happen, so verifying is crucial.
• Appeal the Certification: If you believe the certification is incorrect, you have the right to appeal by filing with the U.S. Tax Court.

Exceptions and Relief

There are certain situations where a tax debt may not be certified as seriously delinquent, such as when:

• The taxpayer is in bankruptcy.
• The taxpayer is identified as a victim of tax-related identity theft.
• The taxpayer is located within a federally declared disaster area.
• An IRS installment agreement is in place, and payments are current.
• An IRS Offer in Compromise has been accepted, and its terms are being followed.
• The taxpayer seeks relief under the innocent spouse provisions.

FAQs

Here are some frequently asked questions regarding the Notice of Passport Action for Seriously Delinquent Debt:

• What is a seriously delinquent tax debt?

  A seriously delinquent tax debt is an unpaid, legally enforceable federal tax liability totaling over $55,000, including interest and penalties, for which a lien or levy has been issued.

• How can I get my passport back if revoked?

  To resolve a passport revocation, pay the tax debt in full or make acceptable arrangements with the IRS. Once resolved, the IRS will notify the State Department to lift the passport restrictions.

• What if I disagree with the IRS certification?

  Taxpayers have the right to challenge the certification by filing a claim with the U.S. Tax Court.

• Are there any automatic exemptions?

  Yes, individuals in specific situations such as bankruptcy, identity theft, or a federally declared disaster area may be exempt from certification.

• Is there a way to prevent passport action if I owe back taxes?

  Yes, entering into a payment agreement and staying compliant with its terms can prevent the IRS from certifying your debt as seriously delinquent.

Conclusion

The Notice of Passport Action for Seriously Delinquent Debt represents a serious enforcement tool used by the IRS. By understanding the implications and taking the appropriate steps, taxpayers can effectively manage and resolve this situation.

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