The Internal Revenue Code Section 7345 now authorizes the IRS to certify seriously delinquent tax debt to the State Department for action. Under that federal law, the State Department is now allowed to deny issuance of passports to, or revoke passports of, delinquent taxpayers after receiving certification from the IRS. The IRS will begin implementing this law on January 1, 2018 by certifying tax debt to the State Department, which will allow the State Department to revoke or withhold the issuance of passports to delinquent U.S. taxpayers.
For the I.R.S. to certify delinquent IRS debt to the State Department, the tax debt must be considered “seriously delinquent tax debt.” This is defined as: (a) an amount exceeding $50,000, as adjusted annually for inflation and including penalties and interest; (b) a levy or notice of federal tax lien has been issued by the IRS; and (c) all administrative remedies, such as the right to request a collection due process hearing, have lapsed or been exhausted.
Some tax debt is not included in determining seriously delinquent tax debt even if it meets the above criteria. It includes tax debt:
- Being paid in a timely manner under an installment agreement entered into with the IRS
- Being paid in a timely manner under an offer in compromise accepted by the IRS or a settlement agreement entered into with the Justice Department
- For which a collection due process hearing is timely requested in connection with a levy to collect the debt
- For which collection has been suspended because a request for innocent spouse relief under IRC § 6015 has been made