Seriously Delinquent Tax Debt
State Department Certification
Overseas When Restrictions Applied
The IRS has begun issuing notice CP508C to taxpayers with ‘seriously delinquent’ tax debt and the service has resumed its program of notifying the State Department of taxpayers’ unpaid federal debts. The U.S. Department of State generally will not renew a passport or issue a new passport to taxpayers after receiving a certification of ‘seriously delinquent’ tax debt from the IRS, and they may revoke or place limitations on current passports. Generally, you can use your passport until you’re notified by the U.S. Department of State that it’s taking action to revoke or limit your passport. Once a taxpayer receives the notice CP508C, they have 30 days to dispute the notice. Taxpayers are cautioned to retain the notice until the issue is resolved. The IRS contact number is in the top right-hand corner of the CP508C notice. If the debt has already been satisfied, the taxpayer will need to have proof of payment available. Seriously Delinquent Tax Debt – Seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt totaling more than $54,000 (including interest and penalties) for which:
Notice of federal tax lien has been filed and all administrative remedies under the Internal Revenue Code have lapsed or been exhausted, or
A levy has been issued.
The seriously delinquent tax debt amount that triggers the IRS to notify the State Department is inflation adjusted, so the $54,000 amount applies to 2021 and will no doubt increase for 2022.Getting the Certification Reversed – Once IRS has certified the ‘seriously delinquent’ tax debt to the U.S. Department of State the IRS will reverse the certification when:
The tax debt is fully satisfied or becomes legally unenforceable.
The tax debt is no longer seriously delinquent.
The certification is erroneous. A previously certified debt is no longer seriously delinquent when:
The taxpayer and the IRS enter into an installment agreement allowing the debt to be paid over time.
The IRS accepts an offer in compromise to satisfy the debt.
The U.S. Department of Justice enters into a settlement agreement to satisfy the debt.
Collection is suspended because the taxpayer requests innocent spouse relief.
The taxpayer makes a timely request for a collection due process hearing in connection with a levy to collect the debt.
Additionally, a certified debt is no longer seriously delinquent for any taxpayer:
Who is in bankruptcy.
Who is identified by the IRS as a victim of tax-related identity theft.
Whose account the IRS has determined is currently not collectible due to hardship.
Who is located within a federally declared disaster area
Who has a request pending for an installment agreement with the IRS.
Who has a pending offer in compromise with the IRS.
Who has an IRS-accepted adjustment that will satisfy the debt in full.
How long will it take to get a certification reversed? Once the tax problem with the IRS has been resolved in one of the instances included above, the IRS will, within 3 days, reverse the certification and provide notification to the U.S. Department of State. If a taxpayer is already overseas when the State Department takes action to revoke or limit the taxpayer’s passport, the agency will either limit the passport only for return travel to the U.S. or issue a limited passport that only permits return travel. If you have any questions related to a tax delinquency or need assistance with an installment agreement or one of the other options discussed, please give this office a call.