Don’t Let IRS Block your Passport! (True Story)

You have some control over whether your passport travel will be stopped, even if you owe a large amount of IRS taxes.

IRS can (and often does) block the issuance or renewal of U.S. Passports for people with “Seriously Delinquent Federal Tax Debt.” That is liability currently over $55,000 for which IRS has been unable to collect and is not covered by adequate payment arrangement. IRS can block renewal or even the original issue of a passport.

This applies to anyone who owes greater than $55,000 in IRS tax and has not arranged for payment of that federal tax liability. Before making a “referral” to revoke a passport, the IRS will send that account listing to the U.S. Department of State’s list of taxpayers with “seriously delinquent debt.” Once on that list, the State Department will not issue a new or renewed passport.

Yes, there is a solution. Fast action and good legal argument can prevent passport revocation, if due to IRS past due taxes.

True Story

We had a client recently that owed between $50,000 to $60,000 to the IRS. He earned a small income and could no longer afford to repay the IRS any amount. The IRS had already issued a Federal Tax Lien and issued a Final Notice of Intent to Levy.

He could not afford to make any Installment Agreement. He had no money to make an Offer-in-Compromise to the IRS. Because of the non-payment, the IRS also issued Notice CP508C for its Notice of Certification about the tax balances. And about his passport.

This IRS Notice CP508C explained that his name was sent to the U.S. State Department to hold all issuance or renewal of a passport for our client. That is what happens at the government level.

Side Note: The reason our client could no longer make any payment was due to a medical emergency. He could barely work. He needed back surgery but could not afford the medical cost charged by the U.S. Instead, he wanted to travel to his home country for a lower-cost surgery. But the IRS blocked his Passport and would not let him travel – even for medical reasons.

The Good Part

This denied passport process can be undone. To have the IRS issue a Reversal of Notice of Certification, we had to convince the government that:

• He could not pay and must be considered “Currently Not Collectible”; and
• His medical interests outweighed the government’s interest in collecting the tax.

It is true that entering an Installment Agreement or having an accepted Offer in Compromise can resolve that problem. Sometimes a “nonpayment agreement” can be as good as an Installment Agreement. IRS will reverse the debt as “not delinquent” and will promptly provide information to the U.S. State Department to remove that taxpayer from the list.

As tax lawyers, we made the perfect legal arguments and provided only the necessary documents. We were able to arrange a permanent non-collectible status on the past-due taxes. Our client will never have to pay that bill. And his Passport was renewed as soon as the IRS issued the letter called “Reversal of Notice of Certification of Seriously Delinquent Federal Tax Debt.”

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