Source: https://www.districtofcolumbiataxattorney.com/Articles/IRS-Actively-Targeting-Taxpayers-For-Passport-Denial-Revocation.shtml
Timestamp: 2019-04-20 10:47:57+00:00

Document:
The IRS is now actively in the process of issuing Notices CP508C to hundreds of thousands of U.S. taxpayers–placing all notified taxpayers' passports in serious jeopardy. Several news outlets this week report that the U.S. State Department confirms that it has already acted on its part in the process and denied passports to an undisclosed number of taxpayers. Reports also confirm that the IRS has already successfully collected over $11.5 million from over 200 taxpayers trying desperately to avoid passport denial. Passport denials are alarming enough-but the same authority used to deny passports also grants the IRS and the U.S. State Department the power to work in tandem to revoke a passport, as well. Concerned taxpayers should not wait to travel abroad before carefully considering their circumstances.
Enacted in 2015, the Fixing America's Surface Transportation Act (FAST Act) provided that the State Department must deny a passport application by any individual certified by the IRS as having a "seriously delinquent tax debt." Additionally, the FAST Act authorizes the State Department to revoke a passport held by an individual with seriously delinquent tax debt. The certification process itself is governed by Internal Revenue Code (I.R.C.) §7345, which also provides taxpayers a limited right to judicial review.
Until recently, the mechanics of the certification process, and any potential for reversal of it, were rather obscure. On April 5, 2018, the Chief Counsel's Office provided advice in Notice CC-2018-005 to Chief Counsel attorneys who handle I.R.C. §7345 passport actions. The Notice shed light on the matter, detailing both the certification and reversal processes for "seriously delinquent taxpayers," as well as the procedures for the judicial review of certifications.
Per Notice CC-2018-005, it is clear that the IRS is relying "on automated systems to identify every module (electronic record of tax liability) on an individual's account with an unpaid assessed tax liability that is not statutorily excepted from the definition of seriously delinquent tax debt or otherwise in a category excluded from certification." Once identified, according to the Notice, the systems will total the amount of unpaid liabilities; if the resulting total exceeds the statutory threshold, then the taxpayer will be identified as having a seriously delinquent tax debt. The Notice clarifies that under these circumstances, a Transaction Code (TC) 971 Action Code (AC) 641 will then post to each module.
Additionally, according to Notice CC-2018-005, certification reversal will also result when the debt falls into one of the discretionary exclusion categories listed in IRM sections 5.1.12.27.4 and 5.19.1.5.19.4. "either entirely or in combination with the circumstances listed in section 7345(c), or the taxpayer enters a combat zone or participates in a contingency operation within the meaning of section 7508(a)."
Once a certified module is qualified for reversal, a TC 972 AC 641 will be posted to it, according to Notice CC-2018-005. Certification "will not be reversed until all modules covered by it have been fully satisfied or otherwise meet the criteria for reversal," the Notice clarifies. After the TC 972 AC 641 is posted, the IRS will concurrently provide notice of the reversal to both the taxpayer and the State Department. The taxpayer will be notified in a CP508R Notice by regular mail.
First, Notice CC-2018-005 emphasizes that judicial review under I.R.C. §7345 does not include review of the amount of the liability. Secondly, since I.R.C. §7345(e) lacks a specific period of limitations within which a certification action may be brought, the Notice explains that a period of six-years will apply. Thus, individuals will have six years from the issuance of a certification notice to bring an action. Finally, as I.R.C. §7345(e) also fails to specify the scope or standard of review for certification actions, the Notice cites 5 U.S.C. §706(2)(A) in that "review should be limited to the Service's records and whether the certification or failure to reverse the certification was 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Significantly, the Notice advises that for certification actions arising in Tax Court, I.R.C §7482(b)(1) places appellate venue in the U.S. Court of Appeals for the District of Columbia Circuit.
Taxpayers with "seriously delinquent tax debt" and wishing to maintain their passport privileges are well advised to consult with a tax professional for reaching an arrangement with the IRS to prevent certification or achieve reversal of an existing certification.
 Pub. L. No. 114-94, §32101(e), 129 Stat. 1311, 1732 (2015).
 I.R.C. §7345(b)(1). Note that this excludes criminal restitution, FBAR penalties, and past-due support payments collectible under §§6305(a) and 6402(c).
 I.R.C. §7345(b)(1)(B). The amount is indexed for inflation. I.R.C. §7345(f). For 2018, the amount is $51,000. Rev. Proc. 2017-58.
 Collection due process rights under I.R.C. §6320 must have lapsed or been exhausted.
 See Notice CC-2018-005, issued April 5, 2018.

References: §7345
 §7345
 §7345
 §7345
 §7345
 §706
 §7482
 §32101
 §7345
 §7345
 §7345
 §6320