Since early 2018, the IRS has been using a little known tax liability enforcement tool authorized under Internal Revenue Code 7345(a) to get the attention of  taxpayers who owe money to the IRS but are not cooperating.

Section 7345(a) provides that if Treasury Department receives certification by the Commissioner that an individual has a seriously delinquent tax debt, such certification must be transmitted to the State Department for action with respect to denial, revocation, or limitation of a passport. 

That's right---the IRS reports seriously delinquent taxpayers to the US Department of State who then take action against the taxpayer's passport status.  What that effectively means is that the Department of State  will generally deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual.   Apparently, the choice of action is up to them.

The definition of a “seriously delinquent tax debt” is an unpaid, legally enforceable, and assessed federal tax liability of an individual, greater than $50,000 (including tax, interest, and penalties indexed each year for inflation), and for which:

• A notice of federal tax lien has been filed under section 6323, and the taxpayer’s right to a hearing under section 6320 has been exhausted or lapsed; or

• A levy has been issued under section 6331.

The current debt amount as of 2022 is around $55,000 when adjusted for inflation.

The taxpayer will be notified that he/she is on the delinquent tax debt list by receipt of IRS Letter CP508-C.  That letter explains the pending action against the taxpayer's passport status and gives them 30 days to respond.  No response or no action to mitigate the situation will result in a certification to the US Department of State for action.

Who is NOT subject to the passport suspension/revocation?  Taxpayer debt which is:

• A debt that is being timely paid under an IRS-approved installment agreement;
• A debt that is being timely paid under an offer in compromise accepted by the IRS;
• A debt that is being timely paid under the terms of a settlement agreement with the Department of Justice;
• A debt in connection with a levy for which collection is suspended because of a request for a due process hearing (or because such a request is pending) under section 6330; and
• A debt for which collection is suspended because the individual made an innocent spouse election or the individual requested innocent spouse relief.

 Bottom line---these even if your tax debt exceeds the $55,000, if you are WORKING with the IRS to resolve your debt, they will likely leave your passport alone.  Ignore the IRS and you may find your next vacation will be limited to the United States, no Bon Voyage!