Understanding the IRS Notice of Passport Action for Seriously Delinquent Tax Debt

Introduction

The IRS Notice of Passport Action for Seriously Delinquent Tax Debt is a significant alert for taxpayers who have unpaid tax liabilities. This notice can lead to severe consequences, including the potential revocation of a passport or prevention of receiving a new one. Understanding this notice, its implications, and how to address it is crucial for taxpayers facing significant tax debt.

What is Seriously Delinquent Tax Debt?

According to the Internal Revenue Code (IRC) Section 7345, seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $55,000, including interest and penalties, for which a Notice of Federal Tax Lien has been filed or a levy has been made. This threshold is adjusted annually for inflation.

The Role of IRS and the State Department

The IRS is responsible for certifying whether a taxpayer has seriously delinquent tax debt. Once certified, the IRS informs the State Department, which can then deny passport applications or renewals and potentially revoke existing passports. It is essential to note that the certification can only be reversed when the taxpayer fully resolves the debt or comes to an agreement with the IRS.

Potential Consequences

• Denial of a new passport application or the renewal of an existing passport.
• Possible revocation of the current passport, especially if you're in another country.

How to Address an IRS Notice of Passport Action

Receiving a notice is a critical matter that requires immediate attention. Here are the steps taxpayers can take:

• Review the Notice: Carefully read the notice to understand the listed tax debt and any deadlines for responding or paying the debt.
• Verify the Debt: Ensure that the debt amount and details are accurate. You may need to contact the IRS directly for clarification.
• Resolve the Debt: Pay the debt in full, or set up an installment agreement, offer in compromise, or seek to have the certification reversed if wrongly assessed.
• Dispute the Certification: If you believe the certification is incorrect, you have the right to appeal under IRC Section 7345(d).

Options for Handling Delinquent Debt

Payment Agreements

For many taxpayers, setting up an installment agreement with the IRS is a feasible option. This allows the taxpayer to pay the debt over a period. If entered into a valid installment agreement, the IRS will reverse the certification.

Offer in Compromise

Taxpayers can apply for an offer in compromise if they can't pay the full amount or if doing so would create a financial hardship. If accepted, this agreement settles the tax liability for less than the full amount owed.

Innocent Spouse Relief

If the tax debt arises from a joint return, and you believe you shouldn't be held liable, you may qualify for innocent spouse relief, potentially clearing or reducing your responsibility.

Appealing the Certification

If you believe the IRS certification is incorrect or unjustified, it is possible to appeal. However, the appeal must be based on legitimate legal grounds. The taxpayer has the right for judicial review of the certification in either tax court or a U.S. district court.

Conclusion

Receiving an IRS Notice of Passport Action requires prompt and careful action. By understanding the implications and acting swiftly to resolve or dispute the debt, taxpayers can prevent potential disruptions to their travel rights. For further assistance and professional guidance, visit our dashboard.