Stave-Off Passport Revocation with Collection Due Process 

Stave-Off Passport Revocation with Collection Due Process

Stave-Off Passport Revocation with Collection Due Process 

With more and more US taxpayers finding themselves behind on their tax filings, IRS passport revocations are becoming a much more serious penalty tool used by the US government to facilitate tax compliance. In accordance with Internal Revenue Code section 7345, taxpayers who have a seriously delinquent tax debt — that is certified by the Internal Revenue Service — may find themselves having their passport application denied — and even having their passport revoked. Especially for US Taxpayers who travel in and out of the United States relatively often, this can become a very serious issue. One defense tool that Taxpayers have in their arsenal – at least to at least stave off any potential certification of a seriously delinquent tax debt that could lead to passport revocation– is filing a timely Collection Due Process Hearing Request on IRS Form 12153.

Passport Revocation and CDP

In a typical situation we see often, a US person may be residing overseas and while they may be tax compliant in their foreign country, they have not filed US Tax Returns. Oftentimes, this is simply because they reside outside of the United States — with all of their income generated from outside the United States source – and are therefore unaware that they are still required to file a US tax return because they are still considered a US person (merely letting a green card expire does not serve as a formal relinquishment of US person — short of filing a Form I-407). Especially currently, with the IRS being so understaffed, trying to deal with the bureaucracy of the service can be daunting — and in the meantime the IRS may certify the debt which will begin the process of having your passport denied or revoked.

Incorrect Tax Debt

In fact, oftentimes the Taxpayers may not actually owe the debt because once the foreign tax credits and/or the foreign earned income exclusion are applied, the debt is reduced or elimination And of course, Taxpayers should never enter into an installment agreement and agree to pay debt until they are sure they even owe the debt. Therefore, in order to avoid this immediate outcome, the taxpayer may be able to file a Collection Due Process hearing request, which stops the enforcement.

IRC 7345 (2)

      • (2)Exceptions

        • Such term shall not include—

          • (A) a debt that is being paid in a timely manner pursuant to an agreement to which the individual is party under section 6159 or 7122, and

          • (B) a debt with respect to which collection is suspended with respect to the individual—

            • because a due process hearing under section 6330 is requested or pending, or

            • because an election under subsection (b) or (c) of section 6015 is made or relief under subsection (f) of such section is requested.

26 U.S. Code § 6330 – Notice and opportunity for hearing before levy

      •  (a)Requirement of notice before levy

        • (1) In general

          • No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates.

        • (2) Time and method for notice

      • The notice required under paragraph (1) shall be—

        • (A) given in person;

        • (B) left at the dwelling or usual place of business of such person; or

        • (C) sent by certified or registered mail, return receipt requested, to such person’s last known address; not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period.

        • (3) Information included with notice

        • The notice required under paragraph (1) shall include in simple and nontechnical terms—

          • (A) the amount of unpaid tax;

          • (B) the right of the person to request a hearing during the 30-day period under paragraph (2); and

          • (C) the proposed action by the Secretary and the rights of the person with respect to such action, including a brief statement which sets forth—

            • (i) the provisions of this title relating to levy and sale of property;

            • (ii) the procedures applicable to the levy and sale of property under this title;

            • (iii) the administrative appeals available to the taxpayer with respect to such levy and sale and the procedures relating to such appeals;

            • (iv) the alternatives available to taxpayers which could prevent levy on property (including installment agreements under section 6159); and

            • (v) the provisions of this title and procedures relating to redemption of property and release of liens on property.

Golding & Golding: About Our International Tax Law Specialist Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

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