Congress passed legislation in January 2018 that defines people who owe more than $50,000 in federal income taxes as “seriously delinquent” and risk losing their passport. This classification triggers a process where the IRS sends out notices to taxpayers who are overdue on payments. If you ignore those notices, the IRS will send letters to the State Department requesting that it block your passport renewal.

The Treasury Inspector General for Tax Administration estimates there are approximately 500,000 Americans who fall into this category. However, many people aren’t aware of this designation because the IRS doesn’t publicize it.

If you believe you fit into this category, you may want to contact a reputable tax attorney at the McGuire Law Firm to help you navigate the paperwork and make sure you don’t miss future deadlines.

A Denver tax attorney drafted this article to discuss issues related to the IRS reporting your seriously delinquent tax debt to the Department of State and, after that having your passport revoked or application rejected.

In January 2018, the Internal Revenue Service announced it would implement new procedures that could impact an individual’s ability to obtain or maintain a passport. The IRS stated these new procedures will affect individuals with “seriously delinquent tax debts.” Under the Fixing America’s Surface Transportation (FAST) Act, the IRS must notify the State Department of certain taxpayers owing seriously delinquent tax debts. The FAST Act also requires the denial of passport applications, renewals of passports, and in some cases, even the revocation of an individual’s passport.

Actions From The IRS

The IRS sends a notice to the State Department when the agency certifies your state tax debt as “seriously delinquent.” This happens when the amount owed exceeds $50,000. If you don’t pay within 30 days, the IRS will certify your debt to the State Department, and the State Department will start sending letters to the people listed on your account.

You must resolve the issue before applying again if you are denied a passport because of a CP508C. To do so, contact the State Department directly. They will hold your application for up to 90 days while you solve the problem. You cannot appeal the decision.

What Is A Seriously Delinquent Tax Debt?

So what constitutes a seriously delinquent tax debt? Generally, the IRS has defined a seriously delinquent tax debt as someone who has a tax debt to the IRS of more than $50,000. The $50,000 threshold would include tax, penalty, and interest for periods whereby the IRS has filed a Notice of Federal Tax Lien or issued a levy. The US taxpayer can no longer appropriately challenge the lien or levy action.

Take Action

If you are a US taxpayer with a seriously delinquent debt to the IRS, you can likely avoid the IRS contacting the State Department by taking the following action(s).

• Pay the debt in full;
• Paying a settlement amount through a tax settlement or offer in compromise with the IRS;
• Paying the tax debt under a formal installment agreement with the IRS;
• Paying the tax debt through a legal settlement with the Department of Justice;
• Suspending collection action by the IRS through an innocent spouse claim; or
• Requesting a Collection Due Process Hearing with a levy.

A taxpayer in the following situations should not be at risk of impacting their passport rights.

• The taxpayer has filed and is in bankruptcy;
• Is an identity theft victim;
• The taxpayer’s account has been determined non-collectible by the IRS;
• The taxpayer is located in a federally declared disaster area;
• The taxpayer has a pending installment agreement with the IRS;
• The taxpayer has a pending offer in compromise with the IRS; or,
• The taxpayer has an adjustment that with satisfy the IRS debt in full.

Settling Your Debt

If you owe money to the IRS, there are many options for settling the debt. Some people choose to pay what they owe over time; others prefer to settle for less. There are three main offers in compromise: installment agreements, offer in compromise, and collection alternative agreements.

An installment agreement allows you to make payments toward your tax debt. You must file Form 9465, Installment Agreement Request, and request an installment agreement. If you qualify, the IRS will send you an offer letter. You can accept or reject the offer. If you accept, you must start making payments within 30 days. An installment agreement cannot exceed six months.

You can also apply for an offer in compromise. This option lets you negotiate directly with the IRS about how much you owe. You may be able to agree to pay less than you owe. To qualify, you must meet specific requirements. For example, you must have no outstanding tax liens against you, pay at least 90% of your tax liabilities for the previous five years, and file all required returns.

Finally, you can consider an alternative collection agreement. With a collection alternative agreement, the IRS agrees to give you a break on your tax debt. In exchange, you must follow specific rules. For example, you may have to pay interest on some of your debts, or you may have to pay a lump sum. You can find out whether you qualify for a collection alternative agreement by filling out Form 433A, Collection Information Statement for Wage Earners and Self-Employed Individuals.

Prevent Future Passport Issues

In short, to prevent any passport issues if you owe taxes to the IRS, if the tax debt is being addressed, your likelihood of having a passport application denied or a passport revoked is severely lessened.

The above article has been prepared by John McGuire of The McGuire Law Firm. Please remember this article is for informational purposes only, and you should consult directly with your tax attorney or business attorney regarding any tax matters or questions. Call us at 720-833-7705.

First, an IRS tax lawyer could be a lawyer that works for the Internal Revenue Service.  This lawyer would likely represent the government in cases before the United States Tax Court.  These cases would likely involve tax controversies and issues regarding the additional assessment of tax to individuals and businesses.  The specific reasons for the additional assessments of tax could be because not all income was claimed, the IRS is disallowing certain expenses or credits and/or the IRS is disagreeing with how (or where) a specific item was claimed on the individuals or businesses tax return.

On the flip side, an IRS tax lawyer could be a lawyer that represents taxpayers before the Internal Revenue Service in the certain situations that are described above.  John McGuire is a tax lawyer in Denver at The McGuire Law Firm and represents clients before the IRS in matters relating to IRS tax debts, IRS tax audits and other IRS tax disputes. Please feel free to contact John to speak with him regarding any of your tax questions or issues.  In addition to his law degree, John has an advanced degree in taxation known as an LL.M. and enjoys applying his tax knowledge to his client’s issues before the Internal Revenue Service and business related matters.  A free consultation is offered to all potential clients.

Contact The McGuire Law Firm to schedule a free consultation with a Denver tax lawyer!  The McGuire Law Firm has offices in Denver and Golden Colorado for your convenience.

 1) If you are being audited by the IRS or owe taxes to the IRS, you should contact a tax attorney.  An experienced tax attorney can represent you before the IRS and often prevent enforcement action such as bank levies, asset seizures and wage garnishments.  Further, your tax attorney can help you resolve the tax issue, as well as help educate you to hopefully prevent the issues from occurring in the future.  John McGuire is an experienced Denver tax attorney at The McGuire Law Firm and has successfully represented hundreds to thousands of businesses and individuals before the IRS.

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Call us at 720-833-7705 to speak with a Denver tax attorney or international tax attorney and schedule your free consultation.