IRS Passport Revocation or Denial for Unpaid Taxes – CP508C
In late 2015, Congress passed IRS Section 7345. It allows the IRS to work with the State Department to suspend, deny, and revoke the passports of taxpayers with seriously delinquent tax liabilities. The IRS started giving the State Department certifications of unpaid taxes in February 2018, and the agency can take away your passport whether you're at home or abroad.
If you need to travel internationally, you need to make sure that the IRS doesn't take your passport for unpaid taxes. Here’s what you need to know to protect yourself.
What Does the IRS Consider Seriously Delinquent Tax Debt?
Seriously delinquent taxes is a taxpayer with liabilities (including penalties and interest) of more than $55,000 (as of 2022 and adjusts annually) and
- The IRS filed a notice of a federal tax lien, and all “administrative remedies under IRC 6320 have lapsed or been exhausted” OR
- The IRS issued a tax levy
In other words, if you owe over $55,000 and the IRS has issued a tax lien (and the appeal time is over) or a levy, you may lose your passport. However, the IRS has exceptions discussed in the next question and answer section.
What Taxes Owed Does Not Apply In Determining Seriously Delinquent Taxes Owed?
The FBAR penalty and Child Support, do not count. Beyond those two situations, even if a taxpayer owes $55,000 or more (including interest and penalties), the IRS may not consider the tax owed “seriously delinquent” if the taxpayer:
- Made a request for innocent spouse relief
- Requested a collection due process hearing (for the tax that caused the certification)
- Is dealing with a properly filed appeal.
- Applies for a payment plan (pending) or has an IRS-approved installment agreement already and makes payments on-time
- Is currently is in bankruptcy
- Submitted an Offer in Compromise (pending) or has an IRS accepted Offer in Compromise or settlement agreement with the DOJ
- Has applied for innocent spouse relief.
- Was identified by the IRS as a victim of tax-related identity theft
- Currently has a currently not collectible status with the IRS for hardship
- Resides in a federally declared disaster area
- Has an IRS accepted adjustment that satisfies the taxes owed in full
Can the IRS Postpone Certification In Certain Cases?
The IRS will postpone sending the certification to the State Department if the taxpayer is serving in a designated combat zone or contingency operation.
Can You Lose Your Passport for Not Paying Taxes?
Under the new laws, you can lose your passport for not paying your taxes. This applies to taxpayers classified as having “seriously delinquent taxes,” which we explain above.
Can You Get a Passport if You Owe the IRS?
If you have taxes considered “seriously delinquent”, the IRS will send certification of it to the State Department. In most cases, when you apply for a passport, the certification will prevent you from getting approved. However, you have some time. In most cases, the State Department will hold your application for 90 days. This gives you a chance to resolve any erroneous certification issues, pay the tax debt in full, or set up a payment arrangement with the IRS. If you don't take care of the issue within 90 days, the State Department will deny your application.
Does the State Department Notify the Taxpayer Before Denying a Passport?
The State Department will notify you if your passport application has been denied. The notification will be a written notice in the mail. However, before the State Department denies a passport, it will hold the taxpayer’s application for 90 days. This gives the State Department some extra time to make sure denial is the right decision. Usually, the State Department only approves the application if one of the following reasons apply: 1) The IRS sent the certification in error, 2) the taxpayer pays the IRS tax debt in full, 3) the tax debt is legally unenforceable, or 4) the taxpayer has a payment agreement with the IRS. If the tax situation is rectified or meets any of the conditions above, the IRS can issue Notice CP 508R to reverse the certification.
How Does the IRS Take Away Passports?
The IRS doesn’t take away passports per se. Rather, the agency notifies the State Department. Once the IRS sends the certification to the State Department, you can’t get a new passport, renew your existing passport, or use your current passport. For instance, if your passport has been revoked and you try to enter or leave a country, the customs officer will see that your passport has been revoked when they look it up on their computer. Then, they can deny you entry because you no longer have a valid travel document. Or if you submit a new application for a passport, the State Department will deny you based on the letter received from the IRS.
How Can You Keep Your Passport If You Have Taxes Owed?
If you have a lot of taxes owed and you don’t want the IRS to take your passport, you need to act quickly. Any of the following steps can protect your passport:
- Set up and make payments on an installment agreement.
- Convince the IRS to accept an offer in compromise.
- Secure a settlement agreement with the Justice Department.
- Initiate a Collection Due Process Hearing—a hearing with an impartial third party for taxpayers who don’t agree with the amount due. However, the IRS will not reverse a CDP hearing for tax liability that is not the original cause of the certification.
- Apply for innocent spouse relief (ISR), so long as the ISR request pertains to the liability that caused the certification in the first place.
You can also pay down your taxes owed so that it’s below the $55,000 threshold. This only works if you do it before the IRS suspends your passport. Once you have lost your passport, this will not work.
How Do You Know If the IRS Plans to Suspend Your Passport?
If the IRS plans to put you on the certification list, it will send you Notice 6152. This says that you have 30 days to contact the IRS before it moves forward. If you don't respond, the IRS will send Notice CP508C to your last known address. The agency sends a notification to the State Department at the same time.
What Happens If You Lose Your Passport?
Once the State Department receives the notice, it leads to the suspension of your passport. If you are out of the country, you are allowed to travel home, but that’s it. You won’t be able to leave again. If you need to travel for work or personal reasons, the IRS doesn’t care. There aren’t exceptions.
If you have just submitted an application for a passport, the State Department holds the application for 90 days. Take that time to fix your issue with the IRS. If there are still issues at the end of that time period, the State Department will notify you in writing that your application has been denied.
How Can You Get Your Passport Back If You Lose It From Taxes Owed?
Once your passport has been taken away, you can get it back by setting up a payment plan or an offer in compromise. Unfortunately, making a payment so that the bill is under $55,000 will not help you get your passport back.
For example, if you owe $55,000 and you send in $3,000, the IRS will not authorize you to get your passport back. However, if you work with the IRS to set up a payment plan, you can get your passport even if your total balance is still above the threshold.
If you have just filed a new tax return and the IRS owes you a refund, the refund will be applied to your taxes owed. If the refund covers the full tax amount, you will also get your passport back.
How Long Does It Take to Get Your Passport Back After Paying Your Taxes?
Once your taxes are paid in full or you’ve made the necessary payment arrangements with the IRS, the IRS will let the State Department know. This takes about 30 days on the IRS’s end, but the IRS has not explained how long it takes the State Department to update the issue. At this point, the IRS sends you Notice CP508R. It explains that you are no longer on the list. You can now apply for a passport, renew your passport, or use your existing passport.
What If I Need to Travel and the IRS Took My Passport?
If you need to travel, you may be able to get your passport back faster. First, you need to resolve the tax debt by paying it in full, setting up a payment plan, or using one of the other resolution options. Then, you need to show the IRS that you need to travel in the next 45 days. The IRS will expedite your request and send the update to the State Department within 14 to 21 days.
Has Your Passport Been Suspended?
If you’re worried that your passport has been suspended but you’re not sure, there are a couple of steps to take. It may happen in cases where you have moved or not received notices for other reasons.
First, you need to contact the IRS to see how much you owe. Then, you can find out what’s happening with your passport by contacting the National Passport Information Center at (877) 487-2778
What If Your Tax Amount Is Wrong?
If the IRS sends you Notice CP508C and you don’t agree with the amount on the notice, you need to take action quickly before your passport gets suspended. Call the number on the letter as soon as possible. If you’ve already paid your tax bill, send proof of your payment to the IRS.
What If the IRS Takes Away Your Passport Erroneously?
If you believe that your passport was suspended erroneously, you can file suit with the US Tax Court or a US District Court. This also applies if you pay your bill, but the IRS fails to remove you from the list.
Unfortunately, your passport will remain suspended throughout the trial. However, if the suit is successful, the courts will order the IRS to withdraw your name from the certification list. The courts can’t remove liens or award you financial damages.
Under the law, you cannot sue the State Department for mistakenly taking away your passport.
Can the IRS Take Away Your Passport If You Live Abroad?
If you have an excessive tax liability (over $55,000), the IRS can initiate the process to suspend your passport regardless of where you live. If that happens, you may have the ability to travel back home, but your ability to use your passport to go anywhere would be seriously compromised. To avoid this, you may want to participate in the Offshore Voluntary Disclosure Program (OVPD).
Remember the United States is one of the only countries in the world that requires you to report income regardless of where you live or where it was earned. Luckily, in most cases, you can qualify for a credit if you pay income tax to the country where you reside, so you usually don’t have to worry about double taxation. The IRS also requires taxpayers to report any amounts over $10,000 in foreign accounts, and failure to notify the IRS can result in serious penalties. Fortunately, the IRS doesn't count FBAR penalties when determining whether or not you have seriously delinquent tax debt.
Why Does the Government Take Away Passports for Unpaid Taxes?
Taking away passports is designed to address the tax gap. Every year, the IRS loses out on billions of dollars of tax revenue due to people not paying their taxes. Taking away, revoking, or denying passports can be an effective way to get people to deal with their unpaid taxes. This is especially true for taxpayers who travel internationally for work or because they have families in other places. Initially, when the bill was proposed in 2012, lawmakers were opposed, but eventually, the rule piggybacked into the law through a highway funding bill.
However, the lack of a passport doesn't just affect international travel. It can also prevent some people from traveling domestically. In particular, the states of Louisiana, Minnesota, New Hampshire, and New York have state IDs that don't meet federal Real ID standards. As a result, people from these states often use their passports to fly domestically.