Seriously Delinquent Tax Debt: What Happens and What Can You Do?

The IRS doesn’t take halfway measures when it comes to collecting overdue taxes. It can garnish your wages, file a lien on your assets, and even liquidate them to satisfy your tax debt. Over three years ago, the IRS expanded its collection powers by adding the ability to limit, revoke, or deny the issuance of your passport if you have seriously delinquent tax debt.

What Is Seriously Delinquent Tax Debt?

Under IRC section 7345, your federal tax debt is seriously delinquent if it totals more than $52,000 including interest and penalties and

  • A levy has been issued OR 
  • A notice of lien has been filed and you failed to challenge the notice within the specified time frame OR your challenge was unsuccessful

When this happens, the IRS will certify your debt to the State Department, which will then deny your application for a new passport or even revoke your existing one. If this happens while you are out of the country, you may receive a temporary passport that covers your direct return to the US, but from that point on, your ability to travel internationally is revoked.

What Can You Do?

If you receive a Notice CP 508C from the IRS (which advises that your tax debt has been certified with the State Department), it is important to take immediate action. Loss of your passport can prevent you from making key business trips, which will impact your livelihood, and affect your ability to enjoy family vacations or visit loved ones outside the country. If you live abroad, you may find that your travel options are limited to a return trip to the US.

Your options for preventing or reversing your certification are:

  • Paying your tax debt in full
  • Proposing an installment agreement, which allows you to repay your tax liability over time instead of all at once
  • Presenting an acceptable offer in compromise, which settles your tax debt for less than the full amount owed if full repayment would cause undue hardship
  • Requesting a collection due process appeal, which delays collection attempts until you complete your appeal
  • Making an innocent spouse request to have collection activities suspended

Whichever form of relief you decide to pursue, working with an accomplished and experienced tax law attorney will give you your best chance at success.

Contact a Seattle Tax Attorney

The IRS is probably the most formidable creditor you will ever encounter, but the Internal Revenue Code (Section 7521(b)(2)) gives you the right to consult a tax attorney to help you obtain relief if your debt has been classified as seriously delinquent. Attorney Bob Boeshaar understands U.S. tax law inside and out. He worked as a former IRS trial lawyer, and obtained a Master of Laws in Taxation, so he understands how to negotiate repayment agreements that are likely to be accepted.

Don’t leave your financial security or travel freedom to chance: contact Boeshaar Law for strong, experienced, and nonjudgmental representation that can help you overcome an IRS debt certification and deal constructively with your tax debt. For more information, call (206) 899-4860.

Written by Robert V. Boeshaar

Robert V. Boeshaar

Robert V. Boeshaar is a Seattle tax attorney committed to helping individuals and small businesses who are facing problems with the IRS. He believes in using his experience to serve others and to make a difference in their lives.