IRS Reverses Temporary Relief from Passport Certification for Taxpayers with Open National Taxpayer Advocate Services Cases
December 2019
IRS Reverses Temporary Relief from Passport Certification for Taxpayers. with Open National Taxpayer Advocate Services Cases
On October 16, 2019, the IRS reversed its temporary suspension of passport certification for revocation/denial for taxpayers with open National Taxpayer Advocate Services (TAS) cases. The reversal is based on the IRS belief that excluding cases for certification solely on the basis that the taxpayer is seeking TAS intervention and assistance could permit “won’t pay” taxpayers to circumvent the intent of the law—allowing them to continue to hold or renew a passport even with a debt in excess of $52,000.[1]
Prior to this reversal, Acting TAS Advocate, Bridget Roberts, had blogged the good news that the IRS had agreed to temporarily: (1) exclude from passport certification those cases with TAS involvement, and (2) reverse certifications for TAS taxpayers who were certified prior to engaging TAS. She emphasized that “TAS has long advocated for the IRS to exclude from certification taxpayers who came to TAS and were actively working with us prior to being certified.”[2] Significantly, Roberts highlighted that certain groups of taxpayers may have been so desperate to avoid passport certification that they were unduly pressured into agreeing to unrealistic payment plans, perhaps based on incorrect liability determinations. Specifically, Roberts identified the following taxpayers working with TAS as particularly susceptible to this:
(1) taxpayers who did not believe that they owed a liability and were working with TAS to challenge a substitute for return,
(2) those seeking penalty abatement based on reasonable cause, and
(3) those pursing an audit reconsideration.
ACA maintains that loss or denial of a US passport for Americans overseas holds serious and unparalleled consequences compared to those faced by US citizens living in the United States. An ACA Freedom of Information Act request has revealed that of the over 260,000 cases reported for potential passport revocation, approximately 1,850 represent individuals who are overseas residents.[3] A US passport for these Americans and any American living overseas is the only official US document conclusively proving US citizenship. It is vitally important in a way that is not so for Americans living in the United States.
For those Americans working in high-risk countries and danger zones, a US passport may be their only proof to the US Embassy or Consulate in circumstances necessitating urgent assistance. Also, a US passport is the underpinning document for many Americans to hold “work permits” and “right of residency” in many foreign countries. Without such a document, many would be unable to work or maintain their livelihoods if their US passports were revoked or denied.
ACA supports the US government efforts to track down and prosecute real tax evaders; however, US citizens who are attempting to come into compliance given the new bank account reporting forms, or those who may have been assessed erroneously calculated tax debts should not find themselves coerced into paying onerous and potentially bankrupting amounts just to keep their passports when they are not engaged in active tax evasion.
The reversal appears to extend to those future cases of individuals considering addressing an appeal to an IRS tax decision. This goes against one of the major principals enshrined in the Taxpayer Bill of Right, the right to a fair and just tax system as it forces them to pay first (even if the payment is in error) in order to maintain their right of free movement.
See ACA position on passport revocation: https://www.americansabroad.org/media/files/files/c8188518/final-aca-position-paper-on-passport-revocation.pdf
For full information on the IRS reversal see article by Frost & Co: https://www.districtofcolumbiataxattorney.com/Articles/IRS-Reverses-Temporary-TAS-Passport-Program-Relief.shtml?utm_medium=email&utm_source=November+2019&utm_campaign=Newsletter&utm_content=43789DutyMorning&utm_term=ema15New
[1] I.R.C. §7345(b)(1)(B). The amount is indexed for inflation. I.R.C. §7345(f). For 2019, the amount is $52,000. Rev. Proc. 2018-57.
[2] TAS-13-0819-0014 (Aug. 14, 2019); NTA Blog: IRS Agrees to Temporary Exclusion from the Passport Certification Program for TAS Cases, available at: https://taxpayeradvocate.irs.gov/news/NTA_Blog_Temporary_Exclusion_from_Passport_Certification_Program_for_TAS_Cases.
[3] Letter from Department of Treasury to ACA dated August 20, 2019.