In a statement issued on October 16, 2019, the IRS has announced it will no longer suspend reporting of seriously delinquent taxpayers to the State Department for action regarding their passport for taxpayers seeking assistance of the Taxpayer Advocate Service.[1]

The passport referral program was added by Congress as part of the Protecting Taxpayers Against Tax Hikes Act of 2015 (PATH Act). The IRS describes the program as follows:

To help support fairness and integrity in the tax system, the Internal Revenue Service has made a change in how it handles passport certifications for people with significant tax debt. The Fixing America's Surface Transportation (FAST) Act, signed into law in December 2015, requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. For further information, see Notice 2018-1 regarding implementation of IRC 7345. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.

A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $52,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy. So far, the program has resulted in $1.2 billion in tax payments from taxpayers who the IRS certified to the State Department as being seriously delinquent in their tax debt.[2]

The Taxpayer Advocate Service (TAS) had requested the IRS suspend processing of actions against taxpayers that otherwise would be reported to the State Department that had a pending case before TAS. The IRS, after initially agreeing to that request, has now reversed its position. The Agency notes:

Excluding cases from certification solely on the basis that the taxpayer is seeking assistance from TAS could allow a "won't pay" taxpayer to circumvent the intent of the legislation to obtain or renew a passport. Following the review of relevant considerations regarding these procedures, the IRS has determined that a blanket, systemic exception for anyone with an open TAS case is overly broad and could undermine the effectiveness of the statute enacted by Congress in the FAST Act to collect a seriously delinquent tax debt.[3]

[1] “Update on Passport Certifications and Taxpayer Advocate Service,” IRS website, October 16, 2019, https://www.irs.gov/newsroom/update-on-passport-certifications-and-taxpayer-advocate-service, retrieved October 17, 2019

[2] “Update on Passport Certifications and Taxpayer Advocate Service,” IRS website, October 16, 2019, https://www.irs.gov/newsroom/update-on-passport-certifications-and-taxpayer-advocate-service, retrieved October 17, 2019

[3] “Update on Passport Certifications and Taxpayer Advocate Service,” IRS website, October 16, 2019, https://www.irs.gov/newsroom/update-on-passport-certifications-and-taxpayer-advocate-service, retrieved October 17, 2019