The national Taxpayer Advocate Nina Olson to the rescue – Ms. Olson issues Taxpayer Assistant Orders TAO’s for almost 800 taxpayers whose cases were with the Taxpayer Advocate Services office that Ms. Olson oversees as the National Taxpayer Advocate.
On January 16, 2018 July 24, 2017, April 1 , 2016 and December 14, 2015 Protax warned that under The Fixing America’s Surface Transportation Act (FAST Act), P.L. 114-94, was added Sec. 7345, which authorizes the IRS to certify to the secretary of State that a taxpayer is seriously delinquent with his or her taxes. The State Department can then deny, revoke, or limit the taxpayer’s passport. To qualify as seriously delinquent, the taxpayer must owe the IRS $51,000), including assessed taxes, interest, and penalties.
National Taxpayer Advocate Nina Olson has directed the IRS not to certify some delinquent taxpayers to the U.S. State Department for passport revocation or denial. Generally, these are individuals with open Taxpayer Advocate Service (TAS) cases, Olson explained in a blog post.
“The ability to cause passport revocation or denial provides the IRS with powerful leverage over individuals who are delinquent in their tax debts,” Matthew Lee, partner, Fox Rothschild LLP, Philadelphia, told Wolters Kluwer. “Taxpayers who owe the IRS more than $51,000 and are concerned about the possibility of losing their passport must take immediate steps to address their outstanding tax liabilities, by either paying such debt in full or seeking to negotiate a collection alternative such as an installment agreement or offer-in-compromise,” Lee noted.
Legislation passed in 2015 requires the Treasury Department, upon receiving certification by the IRS that any individual has a seriously delinquent tax debt, to transmit that certification to the State Department. The State Department cannot issue a passport for that individual except in emergency circumstances or for humanitarian reasons. The State Department can also revoke a previously-issued passport.
Seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt totaling more than $51,000 (as adjusted for inflation) for which a notice of federal tax lien has been filed and all administrative remedies have lapsed or been exhausted; or levy has been issued. Certain tax debts, including debts being paid under an installment agreement or offer in compromise, are excluded.
The IRS unveiled guidance on passport certification in January (Notice 2018-1, I.R.B. 2018-3, 299; TAXDAY, 2018/01/15, I.2).
Open TAS Cases
Olson reported that the IRS intended not to exclude taxpayers with open TAS cases from certification. “As of January 16, TAS identified almost 800 taxpayers with an assessed, unpaid federal tax debt over $51,000, who have an open case in TAS, and who do not otherwise meet an exception or exclusion from certification,” Olson said.
Now, Olson has taken action. “I issued Taxpayer Assistance Orders (TAOs) for every one of these almost 800 taxpayers, ordering the IRS not to certify their seriously delinquent tax debts to the State Department,” Olson posted on her blog. “The IRS must refrain from certifying any of these taxpayers until these TAOs are rescinded or modified by the National Taxpayer Advocate, the IRS Commissioner, or IRS Deputy Commissioner,” Olson explained.
“For taxpayers who are actively working with the TAS to resolve their debts, it is unclear what purpose is served by certifying their tax debts. If TAS can get the taxpayer into compliance and resolve the taxpayer’s issues with the IRS, then the purpose of certification has been satisfied,” Olson said.
Some taxpayers may have already been certified before seeking assistance from TAS. Olson said she has directed TAS staff to assist these taxpayers
If the taxpayer’s case does not meet other TAS requirements, TAS employees may assist the taxpayer under the NTA’s public policy authority. “Given the imminent, irreparable harm that taxpayers may face by the loss of their passports and the right to travel internationally, there is clearly a compelling public policy for assisting any taxpayer subject to passport certification,” Olson said.
By George L. Yaksick, Jr., Wolters Kluwer News Staff