Jo Willetts, EA
Director, Tax Resources
Updated on: July 12, 2022
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Having tax debt can have harsh consequences. This makes it important for you to understand the consequences and how to resolve these issues.
One major consequence is passport restrictions.
If you have what the IRS classifies as seriously delinquent tax debt, the government can stop you from getting, renewing, or using your passport.
Since 2018, the IRS has been able to flag (or certify) anyone with seriously delinquent tax debt to the U.S. State Department. This certification allows the State Department to deny a passport application, or revoke a current passport.
The IRS defines seriously delinquent tax debt as “unpaid, legally enforceable federal tax debt totaling more than $55,000 that remains after the IRS has pursued all collection options such as levies to try to collect the debt.”
You’ll get a CP508C Notice from the IRS. It’s important that you open the letter right away. It will tell you why you received the letter and what steps you can take to resolve your debt. It is extremely important that you address the situation quickly.
Remember, scammers often try to disguise themselves as the IRS. If you get anything other than a letter (like a phone call, email, or social media post), it may be fraud, and you should take a closer look.
If you get this notice, the State Department will give you 90 days before it places any restrictions on your passport. You should use that time to fix any certification issues, fully pay your tax debt, or set up a payment agreement with the IRS.
The IRS won’t send certain tax debt situations to the State Department, including taxpayers who:
For other reasons you may be disqualified, the IRS provides a more in-depth list.
You can fix the issue by paying all your tax debt, setting up an IRS payment plan, or getting an offer in compromise or other options.
The IRS will reverse your certification if:
Keep in mind that paying your tax bill to less than $55,000 doesn’t automatically reverse your certification. You also have to set up an agreement with the IRS to get back in good standing. This means initiating a payment plan or other qualifying agreement.
If you think the IRS certified you by accident or that your tax bill is wrong, call the number in the top right of your notice. If you have already paid your taxes, send proof of the payment to the address on your notice.
You’ll get a CP508R Notice, which means the State Department knows about the reversal and you don’t need to respond.
However, it’s important that you keep this notice in your records, continue to pay on time, and meet all the requirements of any installment agreements or other option that you agreed to.
As soon as you resolve your tax issue with the IRS, the IRS will reverse your certification and notify the State Department within 30 days. The IRS has special rules if you need to resolve a passport issue in less than 30 days.
For help creating a strategy to address your tax issue, visit Jackson Hewitt’s Tax Resolution Hub to see how we can help you.
About the Author
Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 35 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.