Experienced IRS Tax Attorney CPA
Passport at Risk: Navigating the IRS CP508C Notice
Understanding The Consequences of Facing Seriously Delinquent Tax Debt and have received an IRS CP508C Notice.
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Monday, October 7, 2024 at 7:48:21 PM UTC
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What is a Seriously Delinquent Tax Debt and What to Do?
Taking your passport is an IRS enforcement technique.
What if I don’t really owe the tax because of tax related identity theft?
What is a Seriously Delinquent Tax Debt and What to Do?
The IRS has identified your tax debt as “seriously delinquent” and had notified the State Department. Generally, the State Department will not issue passports to taxpayers after receiving their delinquent debt certification from the IRS. The State Department may also revoke your current passport.
A seriously delinquent tax debt is an unpaid federal tax debt, including assessed penalties and interest, totaling more than $62,000 (adjusted annually for inflation) for which:
A tax levy has been made
A Notice of Federal Tax Lien (NFTL) has been filed and all administrative remedies available to the taxpayer have been exhausted.
Note: when you appeal a Notice of Intent to Levy cite to article (IRS Letter 11 or 1058) or a Notice of Federal Tax Lien and request a Collection Due Process Lien hearing the taxpayer has not exhausted administrative remedies until the hearing has been concluded.
How does this affect me?
The State Department may also deny a taxpayer's passport application or revoke their current passport. If taxpayers with certified tax debts are overseas, the State Department may issue a limited-validity passport allowing the taxpayer to return directly to the United States.
Taking your passport is an IRS enforcement technique.
Revocation of your passport is another way the IRS is attempting to encourage you to pay the amount of the tax debt you owe them.
You need to act quickly.
The State Department will issue a letter and hold your passport application open for 90 days from the date of the letter to provide you with time to be proactive and keep your passport.
How to Get your passport Back
Pay the tax debt in full.
You file a request for an installment agreement (but not wage levies).
You file a request for an offer in compromise.
The tax debt becomes legally unenforceable (after the statute of limitations expires).
The certification is erroneous.
Your IRS account is classified as ‘currently not collectible’ due to hardship.
You file a CDP hearing request.
Your certification is suspended because of a request for innocent spouse relief.
The tax court or district court of the United States orders the IRS to reverse the certification.
What Happens Next?
The IRS will systemically notify the State Department within 30 days if a previously certified tax debts should be reversed.
Only the Department of State may revoke a passport
The IRS may notify the State Department of a seriously delinquent debt, but the Department of State has sole authority for denying, revoking or limiting a U.S. passport of a certified individual.
Fast-track passport renewal for taxpayers with urgent travel needs
You must meet all three of the following conditions:
You must be eligible for decertification as stated above in How to Get your passport Back,
You can provide proof of travel scheduled within 45 days or less, such as a flight itinerary, hotel reservation, cruise ticket, international car insurance, or other document verifying name of taxpayer, location, and date of travel, and
You have a pending application for a passport or renewal, have received notification that your application is denied or revoked, and provide a copy of the passport denial letter issued by the DOS within the past 90 days.
International taxpayers residing outside of the United States may have an urgent need for a passport without having imminent travel plans. They do not need proof or travel or a proof of passport denial letter issued by the DOS.
FAQs
Q: How do I get my passport back?
A: Once revoked, a passport may be reacquired only by resolving the tax debt, reapplying and paying all applicable passport fees.
Q: What if I don’t really owe the tax because of tax related identity theft?
A: Then you should not be considered seriously delinquent, contact the IRS by calling the number at the top right corner of the notice.
Q: I filed for bankruptcy, and I owe a tax debt higher than the threshold, am I considered to be seriously delinquent?
A: No, a certified debt is no longer considered seriously delinquent if a bankruptcy is filed.
Q: I am located in a federally declared disaster area and I cannot deal with the tax debt, and I considered seriously delinquent?
A: No, if you are located in a federally declared disaster area a previously certified debt is no longer considered seriously delinquent
Q: What should I do if the amount of the tax debt is wrong because I previously paid it?
A: Contact the IRS and send proof of payment to the address on the notice.
Q: How do I know if my passport has been revoked?
A: Call the National Passport Information Center at 887-487-2778.
Q: What can I do if the IRS fails to decertify the tax debt when the certification should be reversed?
A: There is no administrative appeal that can be filed with the IRS, but a civil action against the United States can be brought in the US tax court or a district court of the United States.
Q: What taxes are included to determine the amount of the tax debt?
A: U.S. individual income taxes, trust fund recovery penalties (relating to payroll taxes) and other business taxes for which the individual is liable.
Q: Is tax debt which I am paying according to a settlement agreement I have with the Department of Justice considered seriously delinquent?
A: No, it is specifically excluded by law.
Q: How do I know if my certification of tax debt was reversed?
A: The IRS is required to notify you, it will send a reversal of certification notice, CP 508R.
Q: If I pay down the debt below the threshold, $62,000, will the certification be reversed?
A: No, the certified tax debt must be fully satisfied, but an adjustment to the tax account that reduces the original certification amount below the threshold will reverse the certification. For example, the IRS grants an abatement of penalty request.
About the Author
Thomas F. Dilullo, Esq.,CPA
Thomas F. DiLullo brings a powerful combination of legal and financial expertise to tax resolution as both a licensed attorney and Certified Public Accountant. With over three decades of experience, Mr. Dilullo has mastered the intricacies of tax law and accounting, providing unparalleled service to individuals and businesses facing complex tax challenges.