Posted by: Robert Horwitz | January 9, 2018

PLANNING AN OVERSEAS VACATION? FIRST PAY YOUR TAXES By Robert S. Horwitz

If you’re planning a vacation overseas in 2018 and you owe more than $50,000 in taxes, penalties and interest to the IRS, you have another thing coming. Beginning January 2018 the IRS will start implementing Internal Revenue Code section 7345.  That section was enacted in December 2015.  It says “If the Secretary receives certification by the Commissioner of Internal Revenue that an individual has a seriously delinquent tax debt, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 32101 of the FAST Act.”  You’re “seriously delinquent” if you owe more than $50,000 in assessed tax, penalties and interest and the IRS has either a) filed a notice of federal tax lien and your collection due process rights have lapsed or been exhausted or b) the IRS has begun levy action.

There are a couple of exceptions – the IRS cannot certify you for passport revocation or denial if

  • you entered into an installment agreement to pay your tax,
  • collection action has been suspended because of a collection due process proceeding
  • you requested innocent spouse relief.

Certification can be reversed if the tax is paid in full, if the statute of limitations has lapsed, if the taxpayer has requested innocent spouse relief or the taxpayer has entered into an installment agreement or offer in compromise. Certification is also reversed if it was erroneous.  A taxpayer can sue the IRS in district court or Tax Court for a determination that certification was wrong or should be reversed.

The IRS is required to notify a taxpayer if it has requested the State Department to revoke or deny a passport. Notice will be sent on letter CP508C.  If certification is reversed, notice will be sent to the taxpayer on letter CP508R.

So if you owe the IRS more than $50,000 don’t start planning that trip to the South of France just yet. First, pay your past due tax.

Robert S. Horwitz – For more information please contact Robert S. Horwitz – horwitz@taxlitigator.com or 310.281.3200   Mr. Horwitz is a principal at Hochman, Salkin, Rettig, Toscher & Perez, P.C., a former Assistant United States Attorney of the Tax Division of the Office of the U.S. Attorney (C.D. Cal) and represents clients throughout the United States and elsewhere involving federal and state, administrative civil tax disputes and tax litigation as well as defending criminal tax investigations and prosecutions. Additional information is available at http://www.taxlitigator.com.


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