The Internal Revenue Service has a new tool to encourage taxpayers to pay delinquent tax debts. If the IRS notifies the Secretary of State by certification that an individual has a seriously delinquent tax debt, the Secretary of State may deny issuing or renewing a passport or revoke the individual’s passport. IRC § 7345 is part of the Fixing America’s Surface Transportation Act and was signed into law by President Obama on December 4, 2015.
A seriously delinquent tax debt is an unpaid, legally enforceable federal tax liability greater than $50,000, which has been accessed and taxpayer has received a notice of lien or levy is made. Taxpayers are not considered to have a seriously delinquent tax debt if they are involved in settling their debt through an offer-in-compromise, installment agreement, or are legally contesting the debt.
If the IRS notifies the Secretary of State of such a tax debt, the Code also requires that the taxpayer receive the same notice. If the taxpayer believes the certification is erroneous, taxpayer may bring a civil action in federal district court or the tax court. If a court determines that the certification was erroneous, the court will order the IRS to notify the Secretary of State of such error. Additionally, if the IRS determines that such certification was erroneous or if the debt is satisfied or ceases to be seriously delinquent, the IRS must send notice to the Secretary of State.
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