IRS Taxpayer Advocate Service (TAS)

A vocal critic of the Internal Revenue Service’s passport revocation program, the National Taxpayer Advocate recently announced that she had issued hundreds of orders prohibiting the IRS from certifying taxpayers for passport denial or revocation. The IRS began implementing its passport denial/revocation program on January 22, 2018 (see prior coverage here, here, and here), pursuant to which the IRS will certify a taxpayer’s seriously delinquent tax debt (greater than $51,000) to the State Department. Upon receipt of such a certification, the State Department must deny any passport application, or renewal, filed by such taxpayer, and may even revoke a previously-issued passport. The passport law provides exceptions for taxpayers with current installment agreements, offers-in-compromise, or pending Collection Due Process hearings. The IRS has created additional administrative exceptions, such as for taxpayers whose debt has been declared “currently not collectible” status or taxpayers with pending applications for installment agreements or offer-in-compromise.

The National Taxpayer Advocate has previously written extensive criticism of the IRS passport program (here and here), focusing primarily on the program’s lack of prior notice to taxpayers and potential for violating constitutional due process rights of taxpayers. In her recent Annual Report to Congress, the National Taxpayer Advocate identified the IRS passport program as one of the “20 Most Serious Problems” encountered by taxpayers.

The National Taxpayer Advocate has repeatedly requested that the IRS exercise its discretion to exclude from the State Department passport certification process taxpayers who have requested assistance from the Taxpayer Advocate Service (TAS). When the IRS refused to do so, and rolled out its passport certification program in January without creating any exception for taxpayers with open TAS cases, the National Taxpayer Advocate cried foul:

Certifying taxpayers who are already actively working with TAS to resolve their debts violates the taxpayers’ right to a fair and just tax system and treats TAS taxpayers inconsistently from others who are trying to resolve their issues directly with the IRS. This, in essence, violates Congress’s purpose in establishing the Office of the Taxpayer Advocate.

The National Taxpayer Advocate then took steps to protect taxpayers with open TAS cases from certification. As of January 11, 2018, TAS identified nearly 800 taxpayers with assessed tax debts in excess of $51,000 who have an open TAS case and do not otherwise meet any exclusion from certification. On January 16, the National Taxpayer Advocate issued Taxpayer Assistance Orders (TAOs) for each of these taxpayers, ordering the IRS not to certify their debts to the State Department. By law, the IRS may not certify any of these taxpayers until the TAOs are rescinded or modified by the National Taxpayer Advocate, the IRS Commissioner, or the IRS Deputy Commissioner.

For taxpayers who have already been certified to the State Department prior to seeking assistance from TAS, the National Taxpayer Advocate has issued interim guidance to all TAS employees authorizing TAS to accept passport revocation cases from affected taxpayers even if such cases do not satisfy any TAS Case Criteria. Such cases will be accepted by TAS under Criteria 9, which authorizes TAS to accept cases when the National Taxpayer Advocate determines that a compelling public policy warrants assistance to an individual or group of taxpayers. In doing so, the National Taxpayer Advocate observed:

Given the imminent, irreparable harm that taxpayers may face by the loss of their passports and the right to travel internationally, there is clearly a compelling public policy for assisting any taxpayer subject to passport certification.

The National Taxpayer Advocate also made clear that she would continue to advocate for the IRS to exercise its discretion to exclude from passport certification all taxpayers with open TAS cases, and she committed that TAS would work diligently with already-certified taxpayers to resolve their tax liabilities and become decertified.

As we have previously written, the ability to cause passport revocation or denial provides the IRS with powerful leverage over individuals who are delinquent in their tax debts. Taxpayers who owe the IRS more than $51,000 and are concerned about the possibility of losing their passport must take immediate steps to address their outstanding tax liabilities, by either paying such debt in full or seeking to negotiate a collection alternative such as an installment agreement or offer-in-compromise.  In light of the recent actions undertaken by the National Taxpayer Advocate, affected taxpayers should also consider seeking TAS assistance in order to forestall potential adverse consequences with respect to their passports.

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