Representation before the IRS · Representing a taxpayer in the collection process

Passport revocation

Passport certification is a collection tool that reaches a client’s ability to travel, and it operates almost entirely outside the machinery a practitioner is used to. There is no hearing, no appeal to the Independent Office of Appeals, and no notice to the representative. What there is instead is a short list of things that stop certification and a shorter list that reverses it — and both are worth knowing before a client’s passport application is held.

The rule

The mechanism. On receiving certification from the Commissioner that an individual has a seriously delinquent tax debt, the Secretary of the Treasury transmits it to the Secretary of State for action on denial, revocation or limitation of a passport under § 32101 of the FAST Act (IRC § 7345(a)).

What makes a debt seriously delinquent. An unpaid, legally enforceable federal tax liability of an individual that has been assessed, is more than $66,000 of assessed, unpaid, legally enforceable federal tax liability including penalties and interest^TY2026, and as to which either a notice of lien has been filed under § 6323 and the § 6320 administrative rights have been exhausted or lapsed, or a levy has been made under § 6331 (IRC § 7345(b)(1)). All three conditions, and the third has two alternative routes.

Statutory exclusions. The term does not include a debt being paid in a timely manner under a § 6159 installment agreement or a § 7122 offer, nor one where collection is suspended because a § 6330 due process hearing is requested or pending, or because an innocent spouse election under § 6015(b) or (c) is made or § 6015(f) relief is requested (IRC § 7345(b)(2)).

Administrative exclusions. Beyond the statute, the IRS states it will not certify a taxpayer who is in currently not collectible status due to hardship, has a pending request for an installment agreement or offer, has been identified as a victim of tax-related identity theft, is in bankruptcy, is in a federally declared disaster area, or has an accepted adjustment that will fully satisfy the debt — and will postpone certification for those serving in a designated combat zone or contingency operation. The IRS also states that child support, FBAR penalties and Department of Justice settlement agreements are not seriously delinquent tax debts.

What is included. Individual income taxes, trust fund recovery penalties, business taxes for which the individual is personally liable, and other civil penalties — with assessed penalties and interest counted toward the threshold.

Notice. The Commissioner must contemporaneously notify the individual of a certification or its reversal, and the notice must describe in simple, nontechnical terms the right to bring a civil action (IRC § 7345(d)). That notice is CP508C, sent by regular mail to the last known address — and the IRS states it does not send a copy to the taxpayer’s power of attorney.

Reversal. The Commissioner must notify Treasury, which notifies State, where the certification is found to be erroneous, the debt is fully satisfied, or it ceases to be seriously delinquent under § 7345(b)(2) (IRC § 7345(c)(1)). Timing is within 30 days of an installment agreement being entered into, an offer being accepted, or an innocent spouse election or request; and by the § 6325(a) lien release deadline where the debt is satisfied or becomes unenforceable^TY2026 (IRC § 7345(c)(2)), and an erroneous certification is reversed as soon as practicable.

Judicial review — and only judicial review. The taxpayer may bring a civil action against the United States in a district court, or against the Commissioner in the Tax Court, to determine whether the certification was erroneous or whether the Commissioner has failed to reverse it. The court first acquiring jurisdiction has sole jurisdiction, and a court finding the certification erroneous may order notification to the Secretary of State (IRC § 7345(e)).

Who may certify. The power may be delegated only to the Deputy Commissioner for Services and Enforcement or the Commissioner of an operating division (IRC § 7345(g)).

At the State Department. A certified taxpayer who applies for or renews a passport is issued a letter and the application is held open for 90 days from the date of the State Department's letter to arrange payment, pay in full, or resolve an erroneous certification^TY2026.

Current figures

How it works in practice

The fastest reversal is usually an installment agreement. Section 7345(b)(2)(A) takes a debt being timely paid under § 6159 or § 7122 outside the definition entirely, and § 7345(c)(2)(C) requires notification within 30 days of the agreement being entered into or the offer accepted. For a client with travel booked, that is the route — not litigation, which is slower and harder.

A pending request is enough to stop certification but not to reverse it. The IRS’s administrative position is that it will not certify someone with a pending installment agreement or offer request. That prevents a new certification; it does not by itself undo one already made, for which the statute wants an agreement actually entered into. The order of events matters.

There is no administrative appeal. Certification is not a collection action subject to CDP, and Appeals has no role. The only challenge is the § 7345(e) civil action, in either the district court or the Tax Court, and whichever is filed first takes sole jurisdiction. That choice is made once.

Assume the client learns of it late. CP508C goes by regular mail to the last known address and no copy goes to the representative, which is unusual and is a real trap on a file where the client has moved or is abroad. Many clients first discover the certification when the State Department writes to them, and by then the ninety-day hold is running.

Check whether the predicate is actually satisfied. Certification requires a filed notice of lien with § 6320 rights exhausted or lapsed, or a levy. A certification made where neither has happened, or where the § 6320 rights are still live, is erroneous — and erroneous certification is the one ground the statute says must be reversed as soon as practicable.

How this has changed

Section 7345 was created by the FAST Act (Pub. L. 114-94, 4 December 2015) and has been amended twice since — by the 2017 Act for the inflation measure, and by Pub. L. 115-141 in March 2018, which added the exclusions for pending CDP hearings and innocent spouse requests that now sit in § 7345(b)(2)(B). Those exclusions were not in the original provision, and material predating 2018 does not carry them. The threshold is indexed under § 7345(f) from calendar years beginning after 2016 and rounded to the nearest thousand dollars; it has risen substantially from the amount written into the statute in 2015, so any figure quoted without a year is wrong. The IRS publishes the year-by-year table on its passport page.

Exam focus

The three conditions for a seriously delinquent tax debt, and that the third is satisfied by either a filed lien with exhausted or lapsed § 6320 rights or a levy. The statutory exclusions in § 7345(b)(2) — timely-paid agreements and offers, pending CDP, innocent spouse — and the fact that penalties and interest count toward the threshold. That review is judicial only, in the district court or the Tax Court, with the first to acquire jurisdiction holding it exclusively. Expect the CP508C notice and the absence of a copy to the representative.

Check yourself

1. A seriously delinquent tax debt under IRC 7345 requires all of the following except: (A) That the liability has been assessed (B) That the amount exceeds the indexed threshold (C) That a notice of lien has been filed with § 6320 rights exhausted or lapsed, or a levy made (D) That the taxpayer has been convicted of a tax offence Answer: D.

2. A taxpayer requests a collection due process hearing on the levy. The debt: (A) Remains seriously delinquent (B) Is excluded while the hearing is requested or pending (C) Is excluded only after the hearing concludes (D) Is excluded only if the taxpayer prevails Answer: B. IRC § 7345(b)(2)(B)(i).

3. A taxpayer wishes to challenge a certification. The available forum is: (A) The Independent Office of Appeals (B) A district court or the Tax Court, whichever first acquires jurisdiction (C) A collection due process hearing (D) The Taxpayer Advocate Service only Answer: B. IRC § 7345(e)(1).

4. The IRS certifies a taxpayer and sends CP508C. A copy goes to: (A) The taxpayer only, by regular mail to the last known address (B) The taxpayer and the power of attorney (C) The power of attorney only (D) The taxpayer by certified mail Answer: A. The IRS states it does not send a copy to the power of attorney.

5. A certified taxpayer enters an installment agreement. The IRS must notify of the reversal: (A) Immediately (B) Within 30 days of the agreement being entered into (C) Within 90 days (D) Only on the taxpayer’s request Answer: B. IRC § 7345(c)(2)(C).