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If an individual taxpayer is certified and does not qualify
for an exception or a reversal of certification,
the only statutory remedy is judicial.

is currently suspended because the 5.19.25, Passport Program (Aug. 12, IRS employees can exercise individual
taxpayer requested a CDP hearing or 2020), and provides important addi- discretion. Thus, any individual taxpayer
has a pending hearing. In addition, a tax tional exceptions and definitional clari- who meets the IRM’s exclusion criteria
debt is not seriously delinquent if the fications. First, in addition to the above will be decertified.
individual taxpayer requested innocent- statutory exceptions, the IRS added The guidance also clarifies other
spouse relief for the debt under IRM Section 5.19.25.5, Discretionary issues left open by a plain reading of
Sec. 6015 (Sec. 7345(b)(2)). Exclusions From Certification (Aug. 12, Sec. 7345.
If the IRS has certified the debt as 2020). These exclusions include: (1)
seriously delinquent but then learns the debt that is currently not collectible due Seriously delinquent tax debt
taxpayer meets one of the exceptions, to hardship; (2) debt that resulted from The $50,000 threshold (adjusted for
the Service is obligated to reverse the identity theft; (3) debt of a taxpayer in inflation) is an aggregate of unpaid as-
certification. The IRS is also obligated bankruptcy; (4) debt of a deceased tax- sessed balances and includes tax, penal-
to reverse the certification if the debt payer; (5) debt included in a “pending” ties, and interest. Nonassessed accrued
with respect to the certification was fully offer in compromise; (6) debt included penalties and interest are not included
satisfied or the original certification is in a “pending” installment agreement; (IRM §5.19.25.3(2)). The tax portion
found to be erroneous (Sec. 7345(c)). (7) debt with a pending adjustment that includes but is not limited to tax as-
If an individual taxpayer is certified will fully pay the tax liability for the pe- sessed under an individual’s taxpayer
and does not qualify for an exception or riod; and (8) taxpayers in a disaster zone. identification number (Social Security
a reversal of certification, the only statu- The IRM notes that this list is subject number or employer identification num-
tory remedy is judicial. The taxpayer will to change. It further explains that the ber) such as income taxes, trust fund re-
receive a CP508C notice informing him use of “discretionary” in the IRM means covery penalties, business taxes for which
or her of certification to the secretary of that the agency has decided in its discre- the individual is liable, and other civil
state under Sec. 7345(a). This notice in- tion that any taxpayer qualifying for an penalties (IRM §5.19.25.3(3)). When
forms the taxpayer of the right to bring exclusion will be decertified, not that assessing a client’s risk, it is important
a civil action in either the Tax Court to consider the breadth of debt that can
or a U.S. district court (Sec. 7345(d)). be considered to meet the threshold of
However, the jurisdiction is narrowly being seriously delinquent.
limited to whether the certification was
erroneous or whether the commissioner Equivalent hearings
failed to reverse the certification (Sec. A requested or pending CDP hearing
7345(e)(1); Ruesch, 154 T.C. 289 (2020)). is a statutory exception. However, such
In other words, the taxpayer may not a hearing must be requested within 30
challenge the underlying liability as with days of the CDP notice date, or else
a deficiency case filed in response to a it is considered an equivalent hear-
90-day statutory notice of deficiency. ing, so long as it is requested within
Thus, the only relief available to the a year. A timely appeal of a notice of
taxpayer is an order to the Treasury sec- determination from a CDP hearing can
retary to notify the secretary of state be brought in Tax Court, but not for a
that the certification was erroneous notice of decision from an equivalent
(Sec. 7345(e)(2)). hearing. The IRM clarifies that a pend- IMAGE BY YURIY ALTUKHOV/ISTOCK
ing or requested equivalent hearing is
IRS guidance not within the statutory exception (IRM
The IRS began issuing guidance in §5.19.25.3(1)). Thus, taxpayers should
2018. It is contained in IRM Section always timely request a CDP hearing

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