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DC CURRENTS
Passport revocation as a
collection tool
Author: The IRS has announced its intention to will transmit that certification to the
Evan M. Stone, J.D., LL.M. increase enforcement. Given the annual secretary of state, who will then deny,
tax gap and anticipated federal budget revoke, or limit the U.S passport of that
increases, this should come as no sur- individual (Sec. 7345(a)). In practice, the
prise. The annual tax gap — the estimat- IRS commissioner of the Small Busi-
ed difference between taxes owed and ness/Self Employed (SBSE) Division
taxes collected — is about $600 billion has been delegated the authority
(Sarin, “The Case for a Robust Attack to certify a seriously delinquent tax
on the Tax Gap,” Treasury website (Sept. debt directly to the secretary of state
7, 2021)). Tax professionals can expect (Sec. 7701(a)(11)(B); IRM
increased numbers of examinations, defi- §§5.19.25.2(3) and (4), Passport cer-
ciency notices, liens, and levies. tification overview (Aug. 12, 2020)).
Tax professionals should also con- The decision to deny, revoke, or limit
Taxpayers can lose sider one of the latest tools in the IRS a U.S. passport lies solely with the
their US passports enforcement arsenal that might not have State Department.
A seriously delinquent tax debt
come to mind — Sec. 7345 (revocation
over unpaid tax debts or denial of passport in case of certain means an unpaid federal tax liability
meeting certain tax delinquencies). Taxpayers can lose that is (1) assessed; (2) exceeds $50,000
criteria, and courts their U.S. passports over unpaid tax (adjusted for inflation, which for year
debts that meet certain criteria. This col-
2022 is $55,000, pursuant to Rev. Proc.
have only limited umn discusses the statutory provisions 2021-45, Section 3.59); and (3) with
jurisdiction to review of Sec. 7345, current IRS guidance in respect to which the IRS has filed
a Notice of Federal Tax Lien or
Internal Revenue Manual (IRM)
a certification or Section 5.19.25, Passport Program (Aug. levied with respect to the debt, and
remedy it. 12, 2020), and a recent court of appeals Collection Due Process (CDP) rights
decision upholding the constitutionality have been exhausted or have lapsed
of Sec. 7345. (Sec. 7345(b)(1)). Thus, any individual
taxpayer with a tax debt meeting these
Sec. 7345 basics criteria could be at risk for passport de-
Congress added Sec. 7345 to the Inter- nial, revocation, or limitation unless he
nal Revenue Code in late 2015 as part of or she qualifies for an exception.
the Fixing America’s Surface Transpor- The Code provides statutory excep- PHOTO BY CELSODINIZ/ISTOCK/THINKSTOCK
tation Act, P.L. 114-94. It provides that tions. The debt is not a seriously
if the IRS determines that an individual delinquent tax debt if the taxpayer is
has a seriously delinquent tax debt and timely paying it through an offer in
“certifies” the debt to the Treasury compromise or an installment
secretary, then the Treasury secretary agreement or if collection on the debt
36 July 2022 The Tax Adviser
