Planning on taking a trip overseas? Do you owe back taxes?

Planning on taking a trip overseas?

If you owe back taxes you may not be going!

Understanding the IRS debt and Passport Certification Process

By law (Internal Revenue Code Section 7345), the IRS will certify taxpayers with seriously delinquent tax debts to the State Department for specific actions regarding their passports.

Generally, the State Department will not issue passports to taxpayers

after receiving their delinquent debt certification from the IRS. 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.

Seriously delinquent tax debts are legally enforceable, unpaid federal tax debt (including assessed penalties and interest) totaling more

than $59,000 (adjusted yearly for inflation). These debts include U.S. individual income taxes, Trust Fund Recovery Penalties, business taxes for which taxpayers are personally liable for and other civil penalties.

Ways to Resolve Tax Issues

There are several ways to avoid having the IRS notify the State Department of seriously delinquent tax debt. They include the following:

• Paying the tax debt in full,
• Paying the tax debt timely under an approved installment agreement,
• Paying the tax debt timely under an accepted offer in compromise,
• Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
• Having requested or have a pending collection due process appeal with a levy, or
• Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

Relief programs for unpaid taxes

Some may qualify for one of several relief programs including the following:

• Payment agreement. Taxpayers can ask for a payment plan with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement.
   
• Offer in compromise. Some taxpayers may qualify for an offer in compromise, an agreement between a taxpayer and the IRS that settles the tax liability for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to decide the taxpayer’s ability to pay. Taxpayers can use the Offer in Compromise Pre-Qualifier tool to help them decide whether they’re eligible for an offer in compromise.

Subject to change, the IRS also will not certify a taxpayer as owing a seriously delinquent tax debt or will reverse the certification for a taxpayer: 

• Who is in bankruptcy,
• Who is deceased,
• 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 with the IRS for an installment agreement,
• Who has a pending offer in compromise with the IRS, or
• Who has an IRS accepted adjustment that will satisfy the debt in full.

For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department of the delinquency and the taxpayer’s passport is not subject to denial during the time of service in a combat zone.

Imminent travel plans – expedited reversal of certification request

If you have an open or pending passport application that have international travel plans within the next 45 days, contact the IRS promptly to resolve their seriously delinquent debt. 

Note:  The IRS May expedite a  reversal of a certification to the State Department, the taxpayer must have an open passport application or renewal request. Generally, a passport application only stays open for 90 days after the State Department issues the denial letter.  This allows time to resolve tax issues.  

When expedited, the IRS can generally shorten the 30 days processing time for decertification by 14 to 21 days. Inform the IRS that they have travel scheduled within 45 days or live abroad. Provide the following documents to the IRS when requesting an expedited decertification:

• Proof of travel. This can be a flight itinerary, hotel reservation, cruise ticket, international car insurance or other document showing location, the name of the traveler, and approximate date of travel or time-sensitive need for a passport.
•  Copy of the letter from the State Department denying the taxpayer’s application or revoking their passport (dated within the last 90 days – an open application). The State Department has the sole authority to issue, limit, deny or revoke passports.

Reversal of certification. The IRS will send a Notice CP508R at the time it reverses a certification. The IRS may reverse a certification when:

• The tax debt is fully satisfied or becomes legally unenforceable,
• The tax debt is no longer seriously delinquent, or
• The certification is erroneous.

The IRS may make a reversal within 30 days and provide notification to the State Department as soon as practicable.

The IRS will not reverse certification if a request for a collection due process hearing or innocent spouse relief is on a debt that's not certified. Also, the IRS will not reverse the certification because the balance is paid down below the threshold.