The newly enacted FAST Act allows the Internal Revenue Service to revoke passports from delinquent taxpayers. While passports are governed under the authority of the State Department, the FAST Act allows the Internal Revenue Service to contact the State Department and notify them of seriously delinquent accounts. Once the State Department is notified of seriously delinquent tax liabilities, the State Department can refuse to issue or renew a passport, apply travel restrictions, or revoke a passport.
Passport revocation will affect taxpayers who owe $52,000 (including interest and penalties) or more and travel outside the United States for work or pleasure. However, the Internal Revenue Service will not report a delinquent tax liability to the State Department if a seriously delinquent liability is:
- Being resolved in an installment payment agreement;
- Under consideration for an offer in compromise;
- Under consideration for innocent spouse relief;
- Being contested through a collection due process hearing;
The Internal Revenue Service has the discretion to exclude the following categories of tax debt from being reported to the State Department:
- Debt that the Internal Revenue Service considers “currently not collectible” due to hardship;
- Debt that resulted from identity theft;
- Debt of a taxpayer in bankruptcy;
- Debt of a taxpayer in a disaster zone.
The Internal Revenue Code provides certain safeguards to taxpayers. Before the Internal Revenue Service may report a seriously delinquent liability to the State Department, the Internal Revenue Service must mail Notice CP508C to a taxpayer’s last known address. If you received a Notice CP508C or believe that you will receive a Notice CP508C, contact the qualified tax attorneys at Diosdi Ching & Liu, LLP today. You should also know that you can challenge the reporting of the Internal Revenue Service to the State Department by filing suit in the United States Tax Court or a federal district court. Please contact Diosdi Ching & Liu, LLP for more information regarding this important matter.