Tax Dictionary – Seriously Delinquent Tax Debt
Seriously delinquent tax debt is an individual’s unpaid, legally enforceable federal tax debt totaling more than $50,000* (including interest and penalties) for which a:
- Notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or
- Levy has been issued
Seriously delinquent tax debt is limited to liabilities incurred under Title 26 of the United States Code and does not include debts collected by the IRS such as the FBAR Penalty and Child Support.
Some tax debt is not included in determining seriously delinquent tax debt even if it meets the above criteria. It includes tax debt:
- Being paid in a timely manner under an installment agreement entered into with the IRS
- Being paid in a timely manner under an offer in compromise accepted by the IRS or a settlement agreement entered into with the Justice Department
- For which a collection due process hearing is timely requested in connection with a levy to collect the debt
- For which collection has been suspended because a request for innocent spouse relief under IRC § 6015 has been made
In addition, certification will be postponed while an individual is serving in an area designated as a combat zone or participating in a contingency operation.
*The $50,000 threshold is indexed yearly for inflation.
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The IRS will send you information about the possibility of passport restrictions due to seriously delinquent tax debt beginning with the Notice of Intent to Levy (CP504).
At the same time the IRS sends the State Department notification that you have been certified as having seriously delinquent tax debt, the IRS also sends you a notice (CP508C) informing you that certification of seriously delinquent tax debt has been sent to the State Department. The State Department will hold the certification for 90 days before taking action. They are required by law to deny passport applications if you do not contact the IRS to address the tax debt before the 90 days has expired. The State Department can choose to revoke an existing passport, but it is not required to do so.
Once you pay the balance due in full or make payment arrangements, the IRS will reverse the certification within 30 days of the date the debt is resolved and send notification to the State Department that the certification has been reversed. The IRS will also send you a notice (CP508R) informing you that your tax certification has been reversed.
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