In an effort to put new pressure on taxpayers with tax delinquencies, the Internal Revenue Service (IRS) is leveraging its ability to block international travel—even in the absence of any flight risk. Delinquent taxpayers—but not their lawyers—may receive a Notice CP508C from the IRS if they’ve been certified to the US Department of State and had their passports revoked. Fortunately, there are avenues for dealing with this pressure beyond just relying on the IRS itself, as we describe below. But all of the avenues are time consuming and will take work—even if you pay your taxes in full. Be advised: cutting a check on the way to the international terminal is not likely to suffice.
On February 27, 2019, the IRS issued an information notice reiterating a prior warning that taxpayers with “seriously delinquent tax debts” (a relatively low $52,000 or more) will be reported to the State Department and may have their passports revoked and applications for new and renewed passports denied or significantly delayed.
There are several ways to avoid having the State Department cancel your travel plans. Some are obvious, some are less so—but all will take some time and effort. Initially, working with the IRS, a taxpayer’s options are the ones you’d expect—paying in full, entering into installment agreements or offers in compromise, requesting a collection due process appeal or requesting innocent spouse relief (yes, your spouse may get to take that trip without you). But keep in mind, the IRS will usually reverse a certification within 30 days after resolution of your issue and provide notification to the State Department “as soon as practicable.”
If you run up against a certification that is truly in error or meets some other exception, the IRS maintains a hotline that you can contact, or you may sue to correct the certification in federal district court. If your tax matter is wrapped up in discussions with the US Department of Justice, resolving the tax matter with that department is also an avenue for resolution.
Fortunately, according to the IRS, there is also a long list of taxpayers who, even if seriously delinquent, will not be certified to the State Department. Most of these exceptions, if not already in place, will take time to be put in place, and include taxpayers:
- in bankruptcy,
- who are already deceased,
- identified by the IRS as victims of tax-related identity theft,
- who the IRS has already determined are not currently collectible due to hardship,
- located within a federally-declared disaster area,
- with pending IRS requests for an installment agreement,
- with pending IRS offers in compromise,
- currently serving in a combat zone, or
- who already have an IRS accepted adjustment that will satisfy the debt in full.
A notice of certification to the State Department may create a heightened urgency and significance to your tax matter, especially if you’re dealing with the Department of Justice. If your case has become more urgent on account of a notice, we’re here to help—it’s what we do.