How to Prevent Passport Revocation for Failure to Pay IRS Taxes

U.S. Passport Revocation for Failure to Pay Taxes: Prevention, and Reinstatement

The Internal Revenue Service (IRS) wields significant authority to enforce tax compliance, including the power to certify seriously delinquent tax debts to the U.S. Department of State, potentially leading to passport denial, revocation, or limitation. This authority, enacted under the Fixing America’s Surface Transportation (FAST) Act in 2015, is codified in Internal Revenue Code (IRC) Section 7345. For individuals with substantial unpaid IRS tax liabilities, this measure can severely restrict international travel through passport revocation or denials. This tax lawyers guide provides a step by step process to Prevent Passport Revocation for IRS Taxes, strategies to prevent certification, and steps to reinstate a passport if revocation occurs.

Understanding IRS Passport Revocation Authority

Legal Framework: IRC Section 7345

Under IRC Section 7345, the IRS is authorized to certify to the Secretary of State that an individual has a “seriously delinquent IRS tax debt.” This certification triggers actions by the State Department, which may include denying a U.S. passport application, revoking an existing passport, or limiting a passport’s use (e.g., restricting it to return travel to the U.S.). The statute defines a seriously delinquent tax debt as an unpaid, legally enforceable federal tax liability that:

1. Has been assessed by IRS;
2. Exceeds a threshold amount (adjusted annually for inflation); and
3. Is subject to a Notice of Federal Tax Lien (with Collection Due Process (CDP) rights exhausted or lapsed) or a levy issued by the IRS.

Table 1: Seriously Delinquent Tax Debt Thresholds (2016–2025)

The threshold includes IRS taxes, penalties, and interest, making it relatively easy for liabilities to accumulate beyond the limit, especially for small business owners facing trust fund recovery penalties or individuals with unfiled returns subject to penalties like failure-to-file (IRC § 6651(a)(1)).

IRS Passport Certification Process

Before certifying a tax debt, the IRS must exhaust collection efforts, such as issuing notices, filing a Notice of Federal Tax Lien, or attempting a levy. The IRS sends the taxpayer a Notice CP508C when certifying the debt to the State Department, informing them of the seriously delinquent status and potential passport revocation consequences (IRC § 7345(a)). The State Department holds passport applications for 90 days, providing a window to resolve the issue before denial or revocation.

If the IRS intends to recommend passport revocation, it sends Letter 6152, giving the taxpayer 30 days to resolve the debt or face referral to the State Department. Revocation may occur if the taxpayer fails to honor a payment agreement or has offshore assets that could satisfy the debt but chooses not to use them.

Exceptions to Passport Revocation Certification

Certain debts are excluded from certification under IRC § 7345(b)(2), including:

• Debts being paid through an IRS-approved installment agreement (IA) or offer in compromise (OIC).
• Debts suspended due to a timely requested CDP hearing (IRC § 6330).
• Debts suspended due to a request for innocent spouse relief (IRC § 6015).
• Debts of taxpayers serving in a combat zone.

Additionally, the IRS applies discretionary exclusions, such as debts under examination, in litigation, or subject to pending adjustments that would satisfy the debt (IRM § 5.19.25.5).

Consequences of Passport Revocation Certification

Once certified, the State Department may:

• Deny a passport application or renewal.
• Revoke an existing passport.
• Issue a limited-validity passport for return travel to the U.S. if the taxpayer is overseas (IRC § 2714(e)(2)(B)).

Passport Revocation for failure to pay IRS taxes can disrupt international travel, affect employment requiring global mobility, and strand expatriates, potentially leading to fines or deportation in foreign countries. Even domestic travel may be limited as travel to certain U.S. territories may require a U.S. passport.

IRS Passport Revocation Certification Process

Preventing Passport Revocation

Preventing IRS certification and subsequent passport revocation requires proactive engagement with the IRS. Below are key strategies, supported by relevant code sections and IRS procedures.

1. Pay the Debt in Full

The most straightforward way to prevent certification is to pay the tax debt in full, including penalties and interest. If a tax refund is applied and satisfies the debt, the IRS will reverse certification. Payment in full eliminates the “seriously delinquent” status under IRC § 7345(b).

2. Enter an Installment Agreement (IA)

Entering an IRS-approved IA under IRC § 6159 suspends certification. Taxpayers must contact the IRS within 30 days of receiving Letter 6152 to negotiate a payment plan. The IRS verifies eligibility using IDRS (e.g., TC 971 AC 063 indicates an IA) (). Regular payments, even as low as $300/month for large debts, demonstrate good-faith compliance ().

3. Submit an Offer in Compromise (OIC)

An accepted OIC under IRC § 7122 settles the debt for less than the full amount, preventing certification. A pending OIC may not automatically exempt passport revocation, but IRS generally will delay passport revocation while an OIC is pending,

4. Request a Collection Due Process (CDP) Hearing

Timely requesting a CDP hearing under IRC § 6330 suspends collection actions, including certification. The request must be made within the timeframe specified in the IRS notice (typically 30 days from a levy notice). A CDP hearing allows taxpayers to challenge the debt’s validity or propose collection alternatives.

5. File for Innocent Spouse Relief

Requesting innocent spouse relief under IRC § 6015 suspends certification. This applies to joint tax liabilities where one spouse seeks relief from responsibility. The IRS must notify the State Department within 30 days of such a request (IRC § 7345(c)(2)(B)).

6. Dispute the Debt

If the IRS tax debt is erroneous, taxpayers can challenge the IRS debt to dispute the tax assessment through audit, appeals or tax court before certification is issued.

7. Act Promptly on IRS Notices

Responding to IRS notices (e.g., CP508C, Letter 6152) within the specified timeframe (30 days for Letter 6152, 90 days for State Department action) is essential. Delays or failure to receive notices (common for expatriates) can lead to certification. Taxpayers should ensure the IRS has their current address and consider hiring a tax lawyer to monitor correspondence.

Table 2: Preventive Actions and Relevant Code Sections

Steps for Reinstatement

1. Resolve the Debt:
   • Pay in Full: Submit payment to the IRS, ensuring the debt falls below the threshold or is eliminated. The IRS notifies the State Department within the timeframe required for lien release under IRC § 6325(a) .
   • Enter an IA or OIC: Negotiate a payment plan or settlement. Upon approval, the IRS issues a Notice CP508R, informing the State Department to lift restrictions.
   • Combat Zone Exception: If serving in a combat zone, provide proof to the IRS to suspend certification.
2. Challenge Certification in Court:
   • If the certification is erroneous or the IRS fails to reverse it, taxpayers can file a civil action in U.S. Tax Court or a U.S. District Court under IRC § 7345(e). The court with initial jurisdiction has sole authority.
   • If the court finds the certification erroneous, it may order the IRS to notify the State Department to reverse it. Courts lack authority to release liens, levies, or award damages .
   • Example: In Maehr v. United States Dep’t of State (D. Colo. 2020), the court upheld the constitutionality of IRC § 7345, applying rational basis scrutiny.
3. Seek Expedited Decertification:
   • For urgent travel (within 45 days), taxpayers can request expedited decertification by providing proof of travel (e.g., flight itinerary) and resolving the debt (IRM § 5.19.25.11.2). This does not apply if a prior revocation request exists (TC 971 AC 644).
4. Engage a tax lawyer for passport reinstatement:
   • A tax attorney or enrolled agent can negotiate with the IRS, ensure compliance with procedural deadlines, and represent the taxpayer in court if needed.

Practical Considerations

• Tax Bankruptcy: Certain income tax debts may be dischargeable in bankruptcy if older than three years, not fraudulent, and reported on a return filed at least two years prior. Tax bankruptcy attorney can assess your eligibility.

Chart 2: Reinstatement Process

Prevent Passport Revocation

The IRS’s authority to certify seriously delinquent tax debts under IRC § 7345 represents a powerful enforcement tool, with significant implications for taxpayers’ mobility and livelihoods. By understanding the certification process, leveraging preventive measures (e.g., IAs, OICs, CDP hearings), and acting swiftly to reinstate a revoked passport, taxpayers can mitigate risks. Legal recourse through Tax Court or District Court offers a path to challenge erroneous certifications.

Contact Us at (310) 788 9820 or email to protect your passport and resolve IRS tax issues effectively.