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Delinquent Taxpayers Could Lose Their Passports


Synopsis
 
The Fixing America’s Surface Transportation Act (“FAST Act”) was signed into law by President Obama in late December 2015. It includes a provision permitting the IRS to work with the U.S. State Department to revoke or deny the passport of a taxpayer with a “seriously delinquent tax debt.” The IRS has recently announced that, within 30 days, it will begin advising the U.S. State Department of U.S. citizens with seriously delinquent tax debts.  The State Department is expected to take action within 90 days. 
 
Issue
 
The FAST Act amended IRC §7345, adding a new section entitled “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” Pursuant to this new section, the IRS Commissioner must certify a list of taxpayers with seriously delinquent tax debts to the Secretary of the Treasury who will then send the list of names to the Secretary of State. The Secretary of State may then deny, revoke, or limit these taxpayers’ passports. 
 
Subject to exceptions delineated below, a seriously delinquent tax debt is defined as an unpaid, legally enforceable Federal tax liability of an individual that exceeds $50,000 and has been assessed by the IRS by notice of lien or levy. This amount includes interest and penalties. Under the FAST Act, the Secretary of State is required to take action on a passport for individual taxpayers with these tax debts but may issue a new limited passport permitting only return travel to the United States. 
 
Seriously delinquent tax debt does not include amounts that are part of an installment agreement, an offer-in-compromise, or a collection action that has been suspended because a taxpayer has made an application for innocent spouse relief. Also, there is an administrative exception allowing the State Department to issue a passport in emergency circumstances or for humanitarian reasons. 
 
The FAST Act also empowers the Secretary of State to deny or revoke the passport of a person who fails to include a valid social security number with a passport application or who “willfully, intentionally, or recklessly” provides an incorrect or invalid social security number with a passport application. 
 
Contact
 
Visit our website for more information on CohnReznick’s tax services.
 
 
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. 
 
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