Following on from the January 2018 measures introduced under the Fixing America’s Surface Transportation (FAST) Act, the IRS released Notice IR-2019-23 on Wednesday, 27 February 2019.

 

The latest notice is a fresh warning to taxpayers with overdue debt. They are at risk of being unable to obtain, or renew, their US passport.   

 

Notice CP508C

 

Taxpayers the IRS identifies as ‘seriously delinquent’ (owing more than US$52,000 in tax debt; including interest and penalties on tax debt but excluding Report of Foreign Bank Account penalties) will receive Notice CP508C Revocation or Denial of Passport in Case.

 

The IRS commenced issuing Notice CP508C in February 2018, pursuant to the provisions introduced under the 2018 FAST Act. The notices do not get sent to IRS powers of attorney.

 

Certification

 

Certification is made to the taxpayer’s State Department. It will hold the certification for 90 days before taking any action, to allow the taxpayer time to resolve the situation.

 

Once the taxpayer has addressed their overdue debt, the IRS will reverse the certification within 30 days. The IRS then notifies the State Department, which is required to remove the certification. Thereby removing the risk of passport renewal being denied.

 

Options

 

The notice includes a timely reminder that there are many ways in which overdue tax debt can be paid, or otherwise attended to. Options include:

 

  • setting up a payment arrangement with the IRS
  • having an offer in compromise[1] accepted by the IRS
  • arranging a settlement agreement with the Department of Justice.

Exemptions

 

The IRS does not certify taxpayers to the State Department in the following cases:

If the taxpayer

  • is in bankruptcy,
  • is deceased,
  • is identified by the IRS as a victim of tax-related identity theft,
  • has an account determined by the IRS as currently not collectible due to hardship,
  • is located within a federally declared disaster area,
  • has a request pending with the IRS for an instalment agreement,
  • has a pending offer in compromise with the IRS, or
  • has an IRS accepted adjustment that will satisfy the debt in full.

Next steps

 

If you believe you are at risk of having your passport application denied, contact us on 09-5255931 without
delay for immediate assistance. This includes imminent risk involving travel to or from the United States – we have expert inhouse knowledge on how to manage this situation – including when the notice has been issued in error by the IRS.

 

Interested in learning more? Watch the articles section of our website and follow our LinkedIn page to receive all our commentary on this issue.

 


 

[1] ‘Offer in Compromise’ is an agreement between the IRS to settle a tax debt for less than the balance owed by the taxpayer. The taxpayer must meet several eligibility criteria before making the offer, including having filed all tax returns and paid all required estimated tax payments. The taxpayer cannot be in bankruptcy procedures. An offer in compromise is only an option for taxpayers suffering financial
hardship who meet IRS criteria to make such an offer and is subject to acceptance by the IRS.