Before your client applies for or renews her passport, advise her to make sure that she’s not seriously delinquent on her tax debt. Internal Revenue Code Section 7345 authorizes the State Department to deny a passport application or renewal for anyone who’s deemed to be seriously delinquent on her tax debt to the Internal Revenue Service.
Before denying your client’s passport application, the State Department will hold her application for 90 days. This is to provide her with enough time to resolve any erroneous certification issues, pay the tax debt in full or make an arrangement to pay the IRS.
Under IRC Section 7345(b), the IRS defines seriously delinquent as an unpaid, legally enforceable federal tax liability of an individual that’s been assessed and is greater than $52,000 (for 2019 the threshold is $52,000 and is indexed for inflation). In addition, a notice of federal tax lien must have been filed and all administrative remedies under IRC Section 6320 must have lapsed or been exhausted or a levy issued for the debt.
Some types of tax debts aren’t included in determining seriously delinquent tax debt. Excluded categories include debt:
- Determined to be currently not collectible due to hardship;
- That resulted from identity theft;
- Of taxpayers in a Disaster Zone;
- Of a taxpayer in bankruptcy;
- Of a deceased taxpayer;
- That’s pending an offer in compromise;
- That’s included in a pending installment agreement; and
- Based on pending claims that will result in no balance due.
Your client will be notified in writing via Notice CP 508C once the IRS certifies the tax debt to the State Department. It’s important for your client to keep her address up to date with the IRS, because the notice will be sent by regular mail to her last known address. Reversal of the certification isn’t a quick process, so your client will want to make sure not to wait until the last minute to get ahead of her tax debt. Once she’s resolved her tax debt or made appropriate arrangements, she’ll receive Notice CP 508R within 30 days.