CP508C: The IRS Can Cancel Your Passport for Delinquent Tax Debt
Notice CP508C Means the IRS Wants to Take Your Passport
Notice CP508C means that the IRS is going to contact the State Department to take away your passport. The IRS sends this notice to people who have seriously delinquent tax debt. If you receive this notice, you need to take action quickly if you want to keep your passport. Ideally, you should make arrangements on your delinquent federal tax debt before the IRS resorts to this option.
To get help with tax debt, contact us at the W Tax Group today. We can help you decipher the CP508C notice and help you find the best steps for dealing with the IRS. In the meantime, we’ve put together a short guide to Notice CP508C so that you know what to expect.
When Did the IRS Start Sending CP508C Notices?
In 2018, the IRS issued a press release that it was going to start contacting the State Department to take passports away from people with seriously delinquent tax debt. During COVID, the IRS temporarily suspended this part of its collection actions, but it resumed the process fairly quickly. The IRS began notifying the State Department of taxpayers with seriously delinquent unpaid taxes and began sending Notice CP508C to affected taxpayers on March 14, 2021.
Can the IRS Take Away Your Passport?
On its own, the IRS does not have the authority to take away your passport. However, the agency can contact the State Department and let them know that you have a serious unpaid tax debt and probably shouldn’t be allowed to travel overseas. Then, the State Department can take away your passport.
If you have a seriously delinquent tax debt, the law authorizes the IRS to certify that liability to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS. The State Department may also deny your passport application or revoke your current passport. If you’re overseas, the State Department may issue you a limited validity passport good for direct return to the United States.
What tax liability does the IRS certify to the State Department?
The IRS certifies seriously delinquent taxes to the State Department. Seriously delinquent is when an individual’s unpaid, legally enforceable federal tax debt (including interest and penalties) totals more than $55,000. This is the number as of 2022. The IRS adjusts the number yearly for inflation.
To be considered seriously delinquent, your tax debt must be over the above threshold, and the following must be true:
- A Notice of federal tax lien has been filed and all administrative remedies under the law have lapsed or have been exhausted, or
- A tax levy has been issued.
If there is no federal tax lien and the IRS hasn’t issued a levy against you, that must happen before the IRS can send the CP508C notice.
What tax liability does the IRS not certify to the State Department?
Some tax debt isn’t included such as the Report of Foreign Bank and Financial Account (FBAR) penalty and child support. This means that you can owe over the defined threshold for seriously delinquent taxes, but the IRS won’t send anything to the State Department.
For example, if you owe $40,000 in tax debt, $20,000 in FBAR penalties, and $5,000 in child support, you are over the threshold for seriously delinquent tax debt. However, because the IRS doesn’t certify FBAR penalties and child support to the State Department, you shouldn’t receive a CP508C notice.
The IRS also doesn’t report taxes to the State Department if any of the following are true:
- The tax debt is being paid timely with an IRS-approved installment agreement.
- The taxes are being paid timely with an Offer in Compromise accepted by the IRS or a settlement agreement entered with the Justice Department.
- The taxpayer has made a timely request for a collection due process hearing regarding a levy to collect the tax debt.
- The IRS has suspended collection on the taxes because a request for innocent spouse relief has been made.
Also, the IRS will not certify anyone as owing a seriously delinquent tax debt if the following statements apply to their situation.
- They’re in bankruptcy.
- They’ve been identified by the IRS as a victim of tax-related identity theft.
- They’re located within a federally declared disaster area.
- They have a request pending with the IRS for an installment agreement.
- They have a pending Offer in Compromise with the IRS.
- They have an IRS-accepted adjustment that will satisfy the liability in full.
The IRS will also postpone certification while an individual is serving in a designated combat zone or participating in a contingency operation. If you have received CP508C notice for someone who meets the criteria in this list, contact a tax attorney or reach out to the IRS directly.
What Happens When You Receive Notice CP508C?
When you receive the CP508C notice, that is just the beginning of the process. Here is a look at what happens behind the scenes and to you after you receive this notice.
Certification to the State. The IRS will send you Notice CP508C at the same time that the IRS certifies the seriously delinquent tax liability to the State Department. The IRS will send the notice by regular mail to your last known address. Your power of attorney will not receive a copy of the notice.
This means that you may miss this notice. As a result, if you have seriously delinquent taxes, you shouldn’t wait for the CP508C notice. Instead, you should get help from a tax professional as soon as possible.
Once the State Department receives certification of your tax debt, the department will hold your application for 90 days. This gives you time to explore the following options:
- Resolve any erroneous certification issues
- Make full payment of the tax liability
- Enter a satisfactory payment arrangement with the IRS
If you pay the tax debt in full or prove that the certification was in error, the IRS will reverse the certification. If you set up a payment plan, you may need to request to have the certification reversed.
Reversal of certification. The IRS will send you Notice CP508R at the time it reverses certification. The IRS will reverse a certification if any of the following are true.
- The tax liability is fully satisfied or becomes legally unenforceable.
- The tax liability is no longer seriously delinquent.
- The certification is erroneous.
The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practicable.
The IRS will not reverse certification if your request for a collection due process hearing or innocent spouse relief is on a liability that’s not certified. Also, the IRS will not reverse the certification because you pay the liability below the threshold.
Referral to revoke passport. The IRS may ask the State Department to exercise its authority to revoke your passport. For example, the IRS may recommend revocation if the IRS had reversed your certification because of your promise to pay, and you failed to pay. The IRS may also ask the State Department to revoke your passport if you could use offshore activities or interests to resolve your liability but choose not to.
Before the IRS sends a revocation referral to the State Department, the IRS will send you Letter 6152 asking you to call the IRS within 30 days to resolve your account to prevent this action.
Judicial review of certification. You can request a judicial review of the certification. However, it’s important to note that the State Department is held harmless in these matters and cannot be sued for any erroneous notification or failed decertification under the law.
If the IRS certified your liability to the State Department, you can file suit in the U.S. Tax Court or a U.S. District Court to have the court determine whether the certification is erroneous, or whether the IRS failed to reverse the certification when it was required to do so. If the court determines the certification is erroneous or should be reversed, it can order the IRS to notify the State Department that the certification was in error.
The law doesn’t give the court authority to release a tax lien or levy or award money damages in a suit to determine whether a certification is erroneous. You’re not required to file an administrative claim or otherwise contact the IRS to resolve the erroneous certification issue before filing suit in the U.S. Tax Court or a U.S. District Court.
How to Get Your Passport Back
The most straightforward way to get your passport back is to pay the tax debt in full. However, that’s usually not an option for most people or they wouldn’t have gotten into this situation. Luckily, there are other options. If you can’t pay the full amount you owe, you can make alternative payment arrangements such as a payment plan or an Offer in Compromise to have your certification reversed.
If you disagree with the tax amount or the certification was made in error, you should contact the phone number on Notice CP508C: 855-519-4965; 267-941-1004 (international callers). If you’ve already paid the tax liability, you should send the IRS proof of that payment to the address on the CP508C notice.
If you recently filed your tax return for the current year and expect a refund, the IRS will apply the refund to the liability. If the refund is enough to satisfy your seriously delinquent tax liability, the IRS considers the account fully paid.
Do Unpaid Taxes Affect My Passport Status?
Unpaid taxes don’t affect your passport status unless you have a seriously delinquent tax debt. Then, the IRS can notify the State Department and ask them to revoke your current passport and deny your passport application. The State Department will notify you in writing if the State Department denies your U.S. passport application or revokes your U.S. passport.
What If I Need My Passport for Work?
If you need your U.S. passport to keep your job, once the IRS certifies your seriously delinquent tax liability to the State Department, you must fully pay the balance or make an alternative payment arrangement to have your certification reversed.
What If I Have Imminent Travel Plans and the IRS Takes My Passport?
If you’re leaving soon for international travel and you need to resolve your passport issues, you should contact the IRS or a tax professional promptly. Similarly, if you plan to travel soon and you have a pending application for a new passport or a passport renewal, you should get help quickly. The IRS can help you resolve your tax issues and expedite the reversal of your certification to the State Department.
When expedited, the IRS can generally shorten the 30 days processing time by 14 to 21 days. You’ll need to inform the IRS that you have travel scheduled within 45 days or that you live abroad. And you must provide the following documents to the IRS:
- Proof of travel. This can be a flight itinerary, hotel reservation, cruise ticket, international car insurance, or another document showing the location and the approximate date of travel. This establishes that you have a time-sensitive need for a passport.
- Copy of letter from State denying your passport application or revoking your passport. The Department of State has the sole authority to issue, limit, deny or revoke a passport. You’ll need to show this letter to the IRS so the IRS can then contact the department and request the reversal. The IRS cannot reverse the denial or revocation on its own.
Get Help With CP508C Notice
If you have unpaid taxes, you need to make arrangements before the IRS starts to do things like tell the State Department to take away your passport. The IRS has a lot of power, and in addition to preventing you from traveling internationally, the agency can file a tax lien against you, garnish your wages, seize your assets, and take other collection actions against you. To protect yourself, you should get help.
At the W Tax Group, we focus on helping people with IRS tax troubles. Whether you owe a small amount or a seriously delinquent tax debt, we can help you deal with the IRS. Want to talk about your options? Want to learn how to get your passport back? Wondering why you received notice CP508C? Then, contact us today.