The Law
Under IRC Section 7345, the IRS certifies seriously delinquent tax debt to the State Department. The State Department can then deny your passport application, revoke your existing passport, or limit your passport to return travel to the United States only. This is not theoretical. It is happening to thousands of taxpayers.
What Triggers Certification
The IRS certifies your debt as seriously delinquent if you owe more than $62,000 in assessed tax, penalties, and interest and the debt is legally enforceable. The $62,000 threshold is adjusted annually for inflation. The debt must not be in an installment agreement, not subject to a pending offer in compromise, not in currently not collectible status, and not subject to a pending CDP hearing.
How to Reverse It
The fastest way to reverse a certification is to enter into an installment agreement or submit an offer in compromise. Once you are in a payment arrangement with the IRS, they must reverse the certification within 30 days. You can also reverse it by paying the debt in full, demonstrating that the debt is not legally enforceable, or getting the assessment reduced below the threshold.
The Timing Problem
The certification process is not instant, but the consequences can hit you at the worst possible time. I have had clients find out their passport was revoked when they tried to board an international flight. By then, it is too late to fix it quickly. If you owe more than $62,000 and plan to travel internationally, resolve the issue before you book your trip.
A tax attorney files the necessary paperwork to get you into a payment arrangement and get the certification reversed. We can also challenge the certification if the underlying tax is disputed or if the IRS failed to follow proper procedures.