When you owe taxes, the IRS may take many different steps to try to get you to pay. You may be hit with liens or levies on your property, and most certainly will face building penalties and interest.
One collection action that may come as a surprise is passport revocation, which started in 2018. In some cases, you may lose your passport if you owe the IRS and haven’t taken any steps to pay or manage your debt with the agency.
This may sound pretty scary — but it won’t come out of nowhere. The IRS will send you notices about your debt and penalties with demands for payments. You may receive Notice CP508C if you have a very high tax balance and the IRS has certified your tax debt to the Department of State.
This post walks through what to expect and the circumstances under which the IRS could revoke your passport.
When the IRS Certifies Tax Debt to the State Department
The IRS won’t revoke your passport unless it’s already certified your tax debt to the U.S. State Department. The IRS states that it only does this if your debt is “seriously delinquent.”
When this happens, the IRS will send a delinquent debt certification to the department, which can then deny your passport application or revoke your existing passport. If you’re already out of the country when this happens, the department may give you a limited-validity passport to get back to the U.S.
When Would the IRS Revoke My Passport?
As of 2024, the IRS considers tax debts seriously delinquent if the balance is over $62,000, including income taxes, trust fund recovery penalties, or business taxes. Some civil penalties may also apply. Note that the threshold amount is adjusted every year for inflation.
Before the IRS files Notice CP508C regarding passport revocation, they also must have filed a federal tax lien and other “administrative remedies” have expired, or they issued a levy to try to further collect the tax debt.
Debts that aren’t under the seriously delinquent category of the IRS include:
- Child support
- Those being paid off through an installment agreement or offer in compromise
- FBAR penalties
- Those suspended under innocent spouse relief
- Those under settlement with the Department of Justice
- Those that are part of a levy collection due process hearing
Your debt also won’t apply if your account is in currently not collectible (CNC) status, you’ve applied for a payment plan or offer in compromise and the request is pending, you’re in bankruptcy, you’ve been a victim of identity theft related to taxes, you’re in a disaster area, or the IRS accepted a tax adjustment to cover your debts.
When you’re unsure if your tax debt would be considered seriously delinquent and could lead to passport revocation, talk to a tax attorney who understands the law and these complex processes.
How the Passport Revocation Process Works
So, now you know when you could have to deal with passport revocation. But what does the process actually look like?
State Department Certification
First, the IRS will certify your seriously delinquent debt to the State Department. This will then trigger the department to take further action related to your passport.
Sending Notice CP508C
The IRS sends Notice CP508C at the same time it sends certification to the State Department. This notice informs you of the certification and provides your outstanding tax debt balance, including penalty and interest charges. This notice will also include a deadline for paying off your balance and contact information for the IRS.
State Department Actions
After it receives certification from the IRS, the State Department will not approve your existing passport application, and if the matter isn’t resolved with the IRS within 90 days, the application will be denied.
At this point, the State Department could also revoke your passport. If your passport application is denied or your passport revoked, you’ll be notified in writing.
Reversing the Certification
There are ways to reverse the IRS’s tax debt certification to the State Department. You must fully pay your outstanding tax debt, reduce the debt so it’s no longer seriously delinquent, or show that the certification was a mistake. These are no simple matters, so make sure you have a tax attorney to work with along the way.
Understanding Notice CP508C
Getting Notice CP508C in the mail can be stressful. At this point, the IRS has already certified your tax debt to the State Department.
However, the notice will tell you exactly what to do to avoid passport revocation. Pay close attention to the details provided about your current balance and the deadline for paying it off. If you can do that, pay as soon as possible. The notice gives instructions for sending in your payment along with the last page of the document as an attachment.
The notice also outlines the legislation requiring the IRS to notify the State Department of seriously delinquent debts, which is the Fixing America’s Surface Transportation (FAST) Act of 2015.
The next page walks through what to do next — both if you agree with the balance owed and if you disagree with it. Notice CP508C then details the amount you owe from each applicable tax year and tax form, plus penalties incurred for each.
Ways to Prevent Passport Revocation
Even if you have seriously delinquent tax debt, you can still turn things around at this stage. You can avoid passport revocation or application denial by taking a few different steps. Here are ways to prevent passport revocation:
Pay Off Your Debt
Chances are, if you’re in this situation, you can’t pay off your full balance. However, if you can, pay it off right away. This way, you can be sure you’ll avoid further collections actions, more penalties and interest, and passport revocation from the State Department.
Set Up a Payment Plan
If you can’t pay the full balance, you can set up an installment agreement with the IRS ASAP. This plan lets you pay off your debts over a set period of time, so you can make a smaller payment now. If you have an active installment agreement in place, your passport won’t be revoked.
Apply for an Offer in Comprise
Another way to protect your passport from revocation is to set up an offer in compromise. You must send in an application that outlines your financial situation and provides an offer to the IRS to essentially settle your debt for less. They may approve it if they believe your offer is all they can reasonably expect to collect from you.
Talk to the IRS about CNC Status
If you’re going through a financial hardship of some kind, the IRS will usually work with you. Let them know what your situation is. You may have to send in an information-gathering form to show them your current finances. If they approve, they’ll put your account into a temporary CNC status, and you’ll be protected from passport revocation while in that status.
Request Innocent Spouse Relief
If your tax liability is because of your spouse’s mistake on your joint tax return, you could qualify for innocent spouse relief. If approved, you wouldn’t be liable for your spouse’s tax liability from their error, such as underreported income that led to inaccurate information about taxes owed. Your debt will be suspended because of your request, which will prevent your passport from being revoked.
Contest the Notice
If you believe the amount shown on Notice CP508C is incorrect, contact the IRS right away using the phone number on the notice. Let the IRS know why it’s incorrect and provide any proof you have to back it up. You also have the right to bring a civil action if you think the IRS made an error when certifying your tax debt to the State Department, or if the agency didn’t reverse it after they were required to do so.
In any of these scenarios, remember you don’t have to deal with the IRS on your own. Work with an attorney who can help you understand your options and how to move forward.
How to Reverse the Certification
If you successfully pay off your debt or set up another relief option with the IRS, the IRS should then reverse the certification. They’ll send you Notice CP508R notifying you of the reversal after you pay off your balance, reduce it to no longer be seriously delinquent, or prove that the certification was made in error.
Unfortunately, once the IRS certifies the debt, you cannot get the process reversed just by making a payment to get under the threshold. At this point, to regain your travel privileges, you will need to work with the IRS to get an approved arrangement with terms that say the certification will be reversed.
For example, say you owe $70,000 and you pay $20,000 before the IRS certifies your debt to the State Department. This will save your passport although you may face other collection actions. However, if you made this payment after your debt was certified, it wouldn’t help in the same way.
What If I’m Going Out of the Country Soon?
The IRS does expedite certifications sometimes if you have travel plans within the next 45 days and have an outstanding passport application. If the State Department sends you a denial letter for your application, you still have 90 days to resolve the matter with the IRS.
If the IRS agrees to expedite reversal, they’ll decertify between 14 to 21 days instead of the full 30 days required for processing. You’ll likely need to show the IRS proof of travel plans and a copy of the denial received from the State Department.
Get Help with Passport Revocation from a Tax Expert
Dealing with a revoked passport or a denied passport application isn’t something you want to deal with. But if you fail to pay off your tax debt, and it’s above $62,000 or the annual threshold and you’ve taken no steps to rectify the issue, passport revocation could happen. The IRS may certify your debt to the State Department, which will then pursue these actions if you don’t act.
If you received Notice CP508C and you’re not sure what to do, call our office at Damiens Law right away. We’ll get to the bottom of the tax issue and provide guidance on your best options for resolution.
Our team also helps with tax liens and levies, unfiled tax returns, tax audits, tax penalties, and much more. We’re experts in the types of tax relief available to you.
Contact Damiens Law to find out more about how we can help with your tax issue.
