Passport Revocation and Denial for Seriously Delinquent Tax Debts: New IRS Procedures Signal More Stringent Enforcement

Abstract

In January 2018, the IRS published procedures to begin enforcement of Internal Revenue Code (IRC) section 7345, which requires the State Department to deny the application for, or revoke the passport of, any individual whom the IRS certifies as having a “seriously delinquent tax debt.” IRC section 7345 was enacted on December 5, 2015, as part of the Fixing America’s Surface Transportation Act (FAST Act). Prior to January 2018, the IRS had not been enforcing IRC section 7345, and there were many questions about how the passport revocation/denial process would work, such as whether there would be any additional exceptions, how the IRS would exercise its discretion, and how the IRS would interact with the State Department. Recently, the IRS has answered many of these questions through the issuance of Notice 2018-01 (Jan. 16, 2018), new Internal Revenue Manual (IRM) provisions, and updates on its website. Now that the IRS has procedures in place to enforce IRC section 7345, it is important for CPAs to advise individual clients about this new and very serious consequence to being noncompliant with their tax liabilities. Below is a description of the provisions of IRC section 7345 and the IRS guidance, followed by answers to common questions that affected individuals may have.