The IRS ability to deny or revoke the passports of taxpayers with “seriously delinquent tax debt” is a serious problem currently being encountered by U.S. taxpayers.

If under Internal Revenue Code Section (IRC) 7345, the Internal Revenue Service (IRS) has identified a taxpayer's federal income tax debt as seriously delinquent, the IRS is authorized to certify a taxpayer's seriously delinquent federal income tax debt to the State Department for the purpose of denying a U.S. taxpayer's passport application or revoking a U.S. taxpayer's current passport.

IRC Section 7345 defines seriously delinquent tax debt as:

• An “unpaid, legally enforceable federal tax liability of an individual,” which has been assessed;
• Is greater than $50,000 (adjusted for inflation); and meets either of the following criteria:
• A notice of lien has been filed under IRC Section 6323 and the Collection Due Process (CDP) hearing rights under IRC Section 6320 have been exhausted or lapsed; or (2) A levy has been made under IRC Section 6331.

Taxpayers Are Notified Via IRS Notice CP508C

The IRS is required to notify taxpayers in writing at the time that the IRS certifies seriously delinquent tax debt to the U.S. State Department. IRS sends written notices by regular mail to the taxpayer's last known address. A taxpayer's power of attorney (POA) representative does NOT receive a copy of the CP508C.

Approximately 270,000 Taxpayers Meet the Criteria

The 2017 National Taxpayer Advocate “Annual Report to Congress,” acknowledges that the implementation of this law denying or revoking the passports of taxpayers with seriously delinquent tax debt is a grave problem. The report estimates that approximately 270,000 taxpayers meet the criteria for a seriously delinquent tax debt.

Taxpayers Should Act Before IRS Notifies the State Department

U.S. taxpayers that arrange payment of their seriously delinquent tax debt before the IRS notifies the U.S. Department of State stand to achieve a better outcome regarding the potential revocation or denial of U.S. passports because of unpaid taxes.

Taxpayers may not learn the IRS has certified their tax debts until after certification.

IRS is understaffed and may be pursuing taxpayers who are already actively trying to resolve their seriously delinquent debt nonpayment problems. As a result,

• IRS is NOT sending separate and stand-alone pre-certification notices that could potentially provide taxpayers with the right to challenge the IRS's position and be heard.
• There are timing issues that further jeopardize a taxpayer's passport.
• The National Taxpayer Advocate report stated that there are taxpayers that have received CP508C notices despite the fact that a taxpayer's tax liability had been paid in full, as well as notices one month after a liability was paid in full, or after having an existing installment agreement in place.

Taxpayers ought to avoid having the IRS notify the State Department of their seriously delinquent tax debt by:

• Paying the tax debt in full;
• Paying the tax debt timely under an approved installment agreement;
• Paying the tax debt timely under an accepted offer in compromise;
• Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice;
• Having requested or have a pending collection due process appeal of a levy; or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

The IRS must reverse the certification to the U.S. Department of State when:

• The tax debt is fully satisfied or becomes legally unenforceable;
• The tax debt is no longer seriously delinquent; and
• The certification is erroneous.

The IRS states that they will reverse a certification within 30 days of resolution of the issue and provide notification to the U.S. State Department “as soon as practicable.”

Some Taxpayers might “NOT KNOW” that they are at risk of losing their passports

U.S. taxpayers living abroad (approximately nine million) might not be aware that they owe money to the IRS due to not timely receiving IRS tax correspondence. IRS stated that the IRS: “generally does not know if international taxpayers receive the tax correspondence sent to them.”

Don't be a victim of your own making and don't let the State Department and IRS block your freedom to travel!

Taxpayers that are seriously behind on their taxes ought to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy. If you are a taxpayer that is behind on your tax obligations, you ought to come forward and pay what you owe or enter into a payment plan with the IRS. Consult your specialized tax adviser to establish a payment plan with IRS.

Stanley Foodman is president and CEO of Foodman CPAs & Advisors in Miami.