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In my first blog as the Acting National Taxpayer Advocate, I’d like to address a topic that has been in the news a good deal over the past year—“passport certification.” Under section 32101 of the FAST Act, if the IRS “certifies” a taxpayer as having a “seriously delinquent tax debt” (currently more than $52,000 and meeting certain other requirements under Internal Revenue Code (IRC) § 7345(b)), the Department of State must deny the taxpayer’s passport application (original or renewal) and may revoke or limit an existing passport.
Previous National Taxpayer Advocate blogs have discussed aspects of the passport certification program, including the lack of a stand-alone notice issued to taxpayers before the IRS certifies their debts and the IRS’s refusal to hold off on certifications while taxpayers are working with TAS to resolve their liabilities.
In today’s blog, I have some good news to report. The IRS recently 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. Although not permanent at this time, this change is a step in the right direction that protects taxpayers who are working with TAS to resolve their liabilities from the severe consequences of passport denials and revocations.
TAS has long advocated for the IRS to exclude from certification taxpayers who came to TAS and were actively working with us prior to being certified. 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).
I should note that if a taxpayer opens a case with TAS and 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.
We hope the IRS will make the exclusion of TAS cases permanent. In addition, TAS has concerns about two other aspects of the passport program’s implementation that we’re urging the IRS to address. First, the IRS recently implemented a program under which it is recommending the State Department revoke existing passports in certain cases, but its standards for deciding which taxpayers to recommend for passport revocation, as prescribed in the Internal Revenue Manual, are so vague that its decisions will risk looking arbitrary and capricious. Second, IRS technology limitations apparently are preventing the agency from sending passport certification notices, decertification notices, and revocation notices to taxpayer representatives.
In the coming months, I am hopeful we can work together with the IRS to come up with improved procedures on each of these issues that fairly balance the revenue collection objective of the passport certification statute with the protection of taxpayer rights, so that taxpayers willing to address their tax liabilities are able to do so with minimal impact on their ability to travel. That, after all, is what Congress wanted when it enacted the passport certification provision into law four years ago.
January 03, 2020 update: On October 16, 2019, the IRS announced that the temporary exclusion for TAS cases was no longer available. I plan to discuss this development, and how TAS is handling passport certification cases, in a forthcoming blog. In the meantime, taxpayers may continue to seek assistance from TAS if they believe they are affected, or may be affected, by the passport certification provisions.
The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.
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