Page 2 - Passport Revocation and Denial for Seriously Delinquent Tax Debts: New IRS Procedures Signal More Stringent Enforcement

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n The debt is a result of a criminal resti-
tution assessment.
n The taxpayer is in bankruptcy.
n The taxpayer’s application for an install-
ment payment agreement or offer in com-
promise is pending.
n The taxpayer is deceased [Internal
Revenue Manual, para. 5.8.1.8(5)].
A taxpayer who is seeking assistance
from the Taxpayer Advocate Service (TAS)
will not be excepted from certification. The
Taxpayer Advocate requested that the IRS
include taxpayers who have sought assis-
tance from the TAS to resolve their tax
debts in the discretionary exceptions to cer-
tification. The IRS agreed not to certify 750
taxpayers with extant Taxpayer Assistance
Orders but did not agree to exempt future
taxpayers applying for TAS assistance. has previously been rejected or that does no holding period—once the IRS sends
As noted above, one of the exceptions to not address the defects that caused the prior the certification notice to the taxpayer,
certification applies if the taxpayer’s request offer to be rejected. In addition, offers are passport denial can occur at any time
for an installment agreement or offer in treated as being filed solely to delay col- because the certification is sent to the
compromise is pending; however, the IRS lection where they are clearly frivolous, Department of State at the same time.
may still certify these tax debts, as this such as for less than the taxpayer’s equity Thus, the IRS does not provide a mean-
exception will not apply if the installment in investments or the ability to make future ingful opportunity to contest the certifi-
agreement request or offer in compromise payments [IRM para. 5.8.4.20]. cation before it occurs (2017 Annual
was not made in good faith, but solely to The IRS has broad discretion to certify Report to Congress, p. 77).
delay collection (IRM para. 5.1.12.27.4). a seriously delinquent tax debt, even when Because there may be only one notice,
For installment payment agreements, the the taxpayer has made a request for an individuals who owe the IRS, as well as
IRS regards a request as being made solely installment agreement or an offer in com- their tax advisors, should pay attention to
to delay collection where the taxpayer pro- promise. Therefore, it is crucial for tax advi- IRS notices to make sure that this crucial
poses a nominal monthly payment (e.g., sors to make sure that any requests are rea- notification is not missed.
$1) or an amount “so small that it does not sonable and address any defects that result-
come close to reflecting the taxpayer’s abil- ed in previous denials. Procedures after Certification
ity to pay.” The IRS also treats requests as After the IRS certifies the taxpayer,
being made solely to delay collection if the Notice of Certification the information will be sent to the State
request does not address changes requested The IRS must provide contemporaneous Department to take action. When a cer-
by the IRS in response to a prior denial or notice of the certification of a seriously delin- tified taxpayer then applies for a pass-
ignores directions from the revenue officer, quent tax debt to the taxpayer by regular port, the State Department will provide
or if the taxpayer has previously defaulted mail [IRC section 7345(d)]. The notice must the taxpayer with 90 days to resolve the
on a prior installment agreement, the tax- include a description of the taxpayer’s right tax delinquency by paying in full, enter-
payer’s ability to pay has not changed since to judicial review “in simple and nontech- ing into an installment agreement, or
the default, and the taxpayer has a history nical terms,” as well as information about obtaining IRS acceptance of an offer in
of noncompliance with filing requirements the application of IRC section 7345 [IRC compromise before denying the appli-
and deposit obligations, such as payroll sections 6320(a)(3)(E), 6331(d)(4)(G)]. cation. If a taxpayer needs the passport
withholding (IRM para. 5.14.3.2). No other notice is required, and specif- to travel within those 90 days, the tax-
The IRS regards an offer in compromise ically, no advance notice prior to certifica- payer must resolve the matter within 45
as being made solely to delay collection tion is required. As explained by the TAS: days from the date of the application so
where the taxpayer submits an offer that is The IRS does not send a stand-alone that the IRS has adequate time to notify
not materially different from an offer that notice prior to certification and there is the State Department.

JULY 2018 / THE CPA JOURNAL 63