Passport Revocation/Denial

Question 1

When can your passport be revoked, denied, or limited under 7345?

What does it mean when the passport revocation/denial is “collateral” penalty?

Answer 1

If individual has aseriously delinquent tax debt
(pursuant to section 32101 of the FAST Act)

“Collateral penalty” = comes up after you don’t pay; not monetary

Question 2

What is a seriously deliquent tax debt?

Answer 2

“Unpaid, legally enforceable Federal tax liability of an individual” that has:

1. Been assessed;
2. Is greater than $50,000 ($54,000 with adjustment for inflation); AND
3. A notice of lien has been filed, AND the taxpayer’s right to receive notice and opportunity for hearing upon filing of notice of lien with respect to such filing have been EXHAUSTED or have LAPSED;
   OR
   A levy was made under 6331.

Question 3

What’s included in seriously delinquent tax debt?

What’s NOT included in seriously delinquent tax debt?

Answer 3

Aggregation of the total amount of ALL current tax liabilities for all taxable years and periods, including interest and penalties. Notice 2018-01.
*Not a year by year thing

Non-tax liabilities, such as assessments under the Affordable Care Act, Employer Shared Responsibility Payments, and penalties for failure to file reports of foreign bank accounts (“FBAR’s”), are NOT included. Internal Revenue Manual, para. 5.1.12.27.2.

Question 4

What are 4 STATUTORY exceptions for consideration of seriously delinquent tax debt (when you won’t get passport revoked/denied)?

Answer 4

If you’re in any communication with IRS, offer in compromise, innocent spouse, in combat zone = won’t have passport revoked

1. A debt that is being paid in a timely manner pursuant to an installment payment agreement or offer in compromise.
2. Collection has been suspended because a request for a collection due process hearing has been requested or is pending (note that the request for an equivalency hearing is not one of the discretionary exceptions).
3. Collection has been suspended because an election for innocent spouse relief has been requested or is pending.
4. Certification will be postponed while an individual is serving in an area designated as combat zone or participating in a contingency operation.

Question 5

What are 6 discretionary exceptions for consideration of seriously delinquent tax debt (when you won’t get passport revoked/denied)?

Answer 5

• The debt is currently not collectible due to hardship;
• The debt resulted from identity theft;
• The debt is a result of a criminal restitution assessment;
• The taxpayer in bankruptcy;
• The taxpayer’s application for an installment payment agreement or offer in compromise is pending; and
• The taxpayer is deceased (it is unclear why a dead person would need a passport in the first place, but, nonetheless, deceased taxpayers are not subject to IRC section 7345).

Question 6

When must the IRS notify the State Department to decertify/reverse the revocation/denial?

Answer 6

• The certification is determined to be erroneous - If the taxpayer has paid the debt in full (not just a partial payment to reduce the liability below the threshold);
• The debt ceases to be a seriously delinquent tax debt under any of the statutory or discretionary exceptions.
• The statute of limitations for collection expires
• The taxpayer is in not collectible status
• An amended return, penalty abatement request, or audit reconsideration eliminates the balance due
• The tax debt is due to identity theft, there is a disaster zone freeze, or the taxpayer is in bankruptcy.

Question 7

Where can you get and not get judicial review of certification or failure to reverse certification?

What’s the statute of limitations for this?

Can you challenge the underlying liability?

Answer 7

CAN = a U.S. district or the Tax Court 
CANNOT = IRS Appeals

No time frame in statute – IRS’ position is 6-years

IRS’s position is that taxpayers cannot challenge the underlying liability.

Question 8

What happened in Maehr v. US Dept. of State?

Answer 8

First federal circuit court decision about constitutionality of IRC 7345.

Court rejected claims of violation of constitutional rights to travel, substantive due process, etc.

We don’t have right to international travel or ability to have a passport