Passport revocation and third-party debt collection provisions enacted.

• Author: Nevius, Alistair M.

Provisions that revoke passports for taxpayers with unpaid tax debts and require the IRS to use third-party debt collectors were included in the Fixing America's Surface Transportation Act, PL. 11494, which was enacted on Dec. 4. The act also repeals a recent change to the extended due date for employee benefit plan returns.

Revocation or Denial of Passport for Unpaid Taxes

The act creates a new Sec. 7345 that requires the secretary of State to deny, revoke, or limit the passport of any person who the IRS certifies has a seriously delinquent tax debt. "Seriously delinquent tax debt" is defined as an outstanding tax debt in excess of $50,000 (adjusted for inflation) for which a notice of lien or a levy has been filed, unless the individual is making timely payments under an agreement with the IRS or collection is suspended because a Collection Due Process hearing or innocent spouse relief has been requested or is pending. This provision is effective upon enactment, Dec. 4,2015.

Under the provision, the IRS will certify to Treasury the identity of persons who have seriously delinquent tax debts, as defined for these purposes. Treasury will transmit these certifications to the State Department for use in determining whether to issue, renew, or revoke a taxpayer's passport. Anyone whose name appears on the certification is ineligible for a passport.

Passport revocation will be allowed only after the IRS has followed its examination and collection procedures and the taxpayer's administrative and judicial rights have been exhausted or have lapsed.

Possible loss of passport will be added to the list of matters required to be included in notices the IRS sends to taxpayers to inform them of potential collection activities under Sec. 6320 or 6331. The IRS will also be required to notify the taxpayer when it sends a certification of serious delinquency to Treasury.

The act also includes a process by which individuals who no longer have a seriously delinquent tax debt can be decertified and by which the IRS can correct erroneous certifications. Individuals will be eligible for decertification if they (1) pay their seriously delinquent tax debt in full; (2) enter into an installment agreement with the IRS; (3) have an offer in compromise accepted by the IRS; or (4) file for relief from spousal joint liability. In these cases, the IRS must notify Treasury that the taxpayer is no longer seriously delinquent (and must provide contemporaneous notice to the...