IRS Revises Passport Certification Process

Published Categorized as Tax Debt
IRS Revises Passport Certification Process

Did you get a letter from the IRS about your passport? The IRS recently started sending these letters to taxpayers with unpaid tax debts. The letters have generated quite a bit of controversy, which caused the IRS to pause to reconsider how it handles this issue. Here is what you need to know about the IRS passport letters and how to deal with them.

About the FAST Act

The Fixing America’s Surface Transpiration (FAST) Act was passed in 2015. It was included in Section 7345 of the Code. It requires the IRS to notify the State Department of taxpayers who owe “seriously delinquent tax debts.”

This includes amounts:

  1. In excess of $52,000,
  2. Which has already been assessed (i.e., recorded as a debt on the IRS’s books), and
  3. Which a lien notice or levy has been made and the time to appeal the lien or levy has passed.

The Code sets out several exceptions too. For example, amounts that are being paid pursuant to an IRS installment agreement or where an offer in compromise was submitted do not have to be reported to the State Department.

The IRS can reverse the certification and provide notification to the State Department in these cases. It can also do so if the tax is paid or if the person files for innocent spouse relief.

Taxpayer Advocate Service Reprieve

The IRS issued Notice 2018-1 to explain how it would implement this law. In July of 2019, the Taxpayer Advocate Service published a report about how this process was being handled by the IRS.

The IRS then suspended the procedures for anyone with an open case with the Taxpayer Advocate Service. This provided a means of avoiding certification process. The IRS recently announced that it will no longer follow this policy.

What Taxpayers Need to Do Now

Even though the IRS notice provides an expedited review process, the process can still take months. Waiting until the last minute before foreign travel isn’t advisable.

This is particularly true if there are unfiled tax returns, as the IRS will have to process the tax returns before it can consider resolving the tax debt. This can add several months to the process.

Taxpayers who receive letters about their passports should take steps to hire a tax attorney resolve their tax debts. This provides yet another incentive to take action sooner rather than later.

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