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Can back taxes lead to a passport application denial?

| Feb 18, 2019 | Tax Controversies |

Yes, is the general answer. To collect seriously delinquent tax debt, currently $51,000 or more including penalties and interest, the IRS now has the power to revoke or deny passports. It took several years to coordinate rules between the IRS and State Department, but last summer the IRS started certifying taxpayers.

While passport applications can be denied, it is unclear whether the agencies will start revoking valid passports. Once a certification occurs a taxpayer’s name goes into a database reviewed prior to approving passport applications. In this post, we will explain how to avoid certification.

Payment options

The CP508C is the form that the IRS mails to notify a taxpayer of certification. The IRS simultaneously sends the notice to the State Department, so waiting until this point could cause issues.

The fastest way to solve the issue is to pay the tax bill in full or make timely payments under an installment or settlement agreement. A pending request for an installment agreement or Offer in Compromise will also postpone certification.

Collection Due Process (CDP)

Requesting a CDP hearing to contest a levy will also prevent the IRS from certifying seriously delinquent tax debt. Strict filing deadlines exist when seeking this relief, so speak with a tax attorney before deciding to pursue CDP relief.

Bankruptcy, innocent spouse and other hardships

A taxpayer who is in bankruptcy or currently not collectible (CNC) status will not be at risk. Several other hardship categories include:

  • Qualifying for innocent spouse relief
  • Living in a federally declared disaster area
  • Being a victim tax-relate identity theft

The State Department will hold onto a passport application for 90 days to give an opportunity to solve the tax issue. This is not a lot of time when planned international travel hangs in the balance. Speak with a tax attorney about finding a solution to resolve back taxes before it becomes an emergency.