IRS Reverses Temporary TAS Passport Program Relief
On October 16, 2019, the IRS announced that it had reviewed and reversed its recent temporary suspension of passport certification procedures on passports for anyone who had a case open with the National Taxpayer Advocate Service (TAS). The IRS explained that:
Excluding cases from certification solely on the basis that the taxpayer is seeking assistance from TAS could allow a “won’t pay” taxpayer to circumvent the intent of the legislation to obtain or renew a passport. Following the review of relevant considerations regarding these procedures, the IRS has determined that a blanket, systemic exception for anyone with an open TAS case is overly broad and could undermine the effectiveness of the statute enacted by Congress in the FAST Act to collect a seriously delinquent tax debt.[1]
Background
As we have previously reported, [2] the Fixing America’s Surface Transportation Act (FAST Act), enacted in 2015, provided that the State Department must deny passport applications by individuals certified by the IRS as having a “seriously delinquent tax debt.”[3] Furthermore, the FAST Act authorizes the State Department to revoke certified individuals’ existing passports. A tax debt is “seriously delinquent tax debt,” if:
- [4] It is an unpaid, legally enforceable federal tax liability of an individual. [4]
- The liability must be assessed. [5]
- The liability must exceed $50,000. [6]
- The IRS filed a notice of federal tax lien under I.R.C. §6323[7], or levied under I.R.C. §6331 with respect to the liability. [8]
TAS Efforts and Temporary Victory
A memo released on August 19, 2019, by TAS stated that, effective July 25, 2019, the IRS had agreed to temporarily suspend TAS cases from the Passport Certification Program. Specifically, the IRS would systemically decertify all certified taxpayers with open TAS cases, and all new TAS taxpayers would be systemically decertified, as well.
In the memo and the National Taxpayer Advocate Blog, Acting TAS Advocate, Bridget Roberts, explained that TAS has long advocated for the exclusion of certain taxpayers working with TAS from passport certification.[9] Roberts explained that:
Without the exclusion from certification for open TAS cases, taxpayers could not take full advantage of TAS’s services. To cite a few examples, taxpayers who believed they did not owe a liability and were working with TAS to challenge a substitute for return, who sought penalty abatement based on reasonable cause, or who pursued an audit reconsideration, all may have felt pressured into agreeing to a payment plan that was unaffordable or based on an incorrect liability determination solely to avoid passport certification. Under the IRS’s temporary policy change, taxpayers can now present their cases and have them fully considered before losing their passport rights, thus protecting their right to a fair and just tax system, a right included in the Taxpayer Bill of Rights in IRC § 7803(a)(3). [10]
Roberts clarified that earlier the Advocate had proposed that taxpayers already certified when coming to TAS would remain certified, but that taxpayers seeking TAS assistance to find a resolution before certification would be protected from certification during TAS involvement.
Remarkably, Roberts reported that the IRS had “agreed to temporarily exclude taxpayers with open TAS cases from passport certification and to reverse certifications for TAS taxpayers who were certified before coming to TAS.” [11]
Roberts was careful to emphasize that it was a temporary suspension, but “a step in the right direction.”[12] She also warned that if a taxpayer “doesn’t work with us in good faith to address the tax liability, we will close the case and the IRS can then certify the taxpayer and recommend passport revocation at that time.” [13]
Conclusion
Unfortunately, taxpayers already working with TAS, and new TAS taxpayers, will no longer be excluded from the Passport Certification Program. Taxpayers who think that they may qualify for a statutory or discretionary exclusion to prevent certification, and taxpayers seeking to reverse an existing certification should contact a tax professional for assistance .
If you have questions or concerns about taxes and the passport certification program, call Frost Law today at (410) 497-5947.
[1] https://www.irs.gov/newsroom/update-on-passport-certifications-and-taxpayer-advocate-service.
[2] https://www.districtofcolumbiataxattorney.com/Articles/IRS-Actively-Targeting-Taxpayers-For-Passport-Denial-Revocation.shtml.
[3] https://www.districtofcolumbiataxattorney.com/Articles/IRS-Actively-Targeting-Taxpayers-For-Passport-Denial-Revocation.shtml.
[4] §7345(b)(1). This does not include criminal restitution, FBAR penalties, and past-due support payments collectible under I.R.C. §§6305(a) and 6402(c).
[6] I.R.C. §7345(b)(1)(B). The amount is indexed for inflation. I.R.C. §7345(f). For 2019, the amount is $52,000. Rev. Proc. 2018-57.
[7] I.R.C. §6320 collection due process rights must have lapsed or been exhausted.
[9] TAS-13-0819-0014 (Aug. 14, 2019); NTA Blog: IRS Agrees to Temporary Exclusion from the Passport Certification Program for TAS Cases, which can be found at: https://taxpayeradvocate.irs.gov/news/NTA_Blog_Temporary_Exclusion_from_Passport_Certification_Program_for_TAS_Cases.
[10] NTA Blog: IRS Agrees to Temporary Exclusion from the Passport Certification Program for TAS Cases, which can be found at:
https://taxpayeradvocate.irs.gov/news/NTA_Blog_Temporary_Exclusion_from_Passport_Certification_Program_for_TAS_Cases.
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