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There has been a lot of news lately about the IRS certifying taxpayers to the State Department for seriously delinquent tax debt. Certification means a taxpayer’s passport will not be renewed and could be revoked. If you are behind on your taxes, do you need to be worried about your next business trip or cancel your vacation? Will they stop you at the airport for your tax debt?
In 2016, Congress passed the Fixing America’s Surface Transportation Act of 2016 (FAST Act). That law authorized the IRS to use access to people’s passports to encourage them to pay their taxes. Specifically, the law says that if the IRS identifies a person as having “seriously delinquent tax debt”, the IRS can issue a certification to the State Department for passport restrictions. “Seriously delinquent tax debt” means:
The IRS can choose, at its discretion, to ignore taxpayers who:
A previous post has more details about who can be certified for passport revocation under the FAST Act. Between the statute’s exceptions and the IRS’s discretionary rules, many taxpayers will never qualify for certification for passport revocation. That means you have no reason to worry that they will stop you at the airport if you:
Even if you could be certified as having seriously delinquent tax debt, that doesn’t mean the State Department is going to immediately revoke your passport and the TSA will stop you at the airport. The FAST Act says when the State Department receives a SDTD certification, it must deny pending passport applications and renewals. However, that mandatory language doesn’t extend to revocation. The law says the State Department “may” revoke an existing passport.
For international travelers, that means as long as they have a currently valid passport, the State Department will have to choose to act against them. If history is any indication, the agency has better things to do with its time.
This isn’t the first time Congress has authorized the State Department to use people’s passports as leverage to get them to pay their debts. Another federal law allows state health and welfare agencies to certify that an individual owes child support arrearages over $2,500. When that certification is sent to the Secretary of State, it must “refuse to issue a passport” to the person, and “may revoke, restrict, or limit a passport issued previously.” If that sounds familiar, it is because it is nearly the same language used in the certification for seriously delinquent tax debt.
The thing is, the Secretary of State is not in the habit of going out of its way to revoke existing passports. Even when people owe tens of thousands of dollars in child support arrearage, the Secretary of State generally waits for them to renew their passport before addressing the certification. This is due to limited resources. It appears the office simply doesn’t have the time or personnel to track down people with unpaid child support, and by extension, people with seriously delinquent tax debt.
First, the FAST Act requires the IRS to send you a notice at the same time certification is sent to the IRS. As soon as the IRS determines that you qualify as having “seriously delinquent tax debt” and issues the certification, it will send you notice CP5089C. You then have an opportunity to respond and have the matter reviewed by the U.S. Tax Court if you believe there has been an error.There’s another reason you don’t have to worry they will stop you at the airport for tax debt: you’ll know about it before that happens. There are two separate notice requirements connected to passport revocation. As long as you have kept your address up to date with the IRS and the Secretary of State, you will know whether your passport is at risk long before you get to the airport.
Next, according to the Code of Federal Regulations (CFRs), the Secretary of State must send you a separate written notice when your application for a passport (or renewal) is denied, or if it revokes an existing passport. Again, the CFRs allow a person who receives that notice to request a hearing to review the reasons for the denial or revocation.
Together, these notices mean before your passport is revoked, you are going to know about it. It is highly unlikely the first time you will learn about your seriously delinquent tax debt will be when they stop you at the airport because your passport has been revoked.
You may not have to worry about being stopped at the airport, but that doesn’t mean you can ignore a certification of a seriously delinquent tax debt. The passport implications of that certification can interfere with your constitutional right to travel, and can make international business and personal connections hard to maintain.
If you do receive a notice of certification of a seriously delinquent tax debt, or if you are worried about protecting your right to international travel, the best thing you can do is to meet with an experienced tax attorney early. Depending on your circumstances, you may be able to use a voluntary disclosure program or Streamlined Filing Compliance Procedures to reduce penalties and enter into a settlement agreement. That will help you get off the certification list and make sure you can walk into a terminal without worrying they will stop you at the airport for tax debt.
Attorney Joseph R. Viola is a tax attorney in Philadelphia, Pennsylvania with over 30 years experience. If you have questions regarding seriously delinquent tax debt or Notices of Certification for the revocation or denial of passports due to tax debt, contact Joe Viola to schedule a consultation.