IRS Passport Revocation: 2025 Definitive Guide, Part III

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9. Appeals and Litigation: What Legal Recourse Do You Have?

The IRS passport revocation program raises a natural question: Can I fight this in court?

The short answer: yes, but the scope is narrow.

Your Rights Under IRC §7345

Section 7345(c) of the Internal Revenue Code allows you to bring a civil action if:

  • The IRS has erroneously certified your debt as seriously delinquent, or
  • The IRS failed to reverse a certification when it was required.

The action can be brought in either:

  • U.S. Tax Court, or
  • U.S. District Court (in your district of residence).

What the Court Can Do

The remedies are limited. A court can:

  • Determine that the certification was erroneous.
  • Order the IRS to notify the State Department that the certification was incorrect.

Critically: the court cannot order the State Department to issue or renew your passport. DOS acts only on IRS certifications. Once IRS reverses, DOS clears the hold.

Burden of Proof

Taxpayers must prove that they either do not owe a seriously delinquent tax debt or that they qualify for an exclusion. Courts rely heavily on IRS transcripts and certifications.

Case Law Examples

  1. Ruesch v. Commissioner (2020) – Taxpayer argued certification violated due process. The Tax Court upheld IRS authority, noting that §7345 provides judicial review and due process.
  2. Rowen v. Commissioner (2020) – Taxpayer challenged certification while claiming hardship. Court held that IRS acted properly because the debt exceeded threshold and no exclusion applied.
  3. Maehr v. United States (2019) – A constitutional challenge arguing passport revocation violated the right to international travel. The District Court rejected this, stating the law was within Congress’s power.
  4. Pfirrman v. Commissioner (2025) – Reinforced that partial payments below the threshold do not trigger reversal unless a formal agreement or full pay is in place.

Practical Takeaway

Litigation is rarely the fastest way to resolve certification. It can take months or years, while DOS keeps your passport restricted. In most cases, administrative resolution (IA, OIC, CNC) is the practical path. Court is a backstop when the IRS misapplies the law.

10. Special Profiles: Who Is Hit the Hardest?

Different groups face unique risks and consequences when passports are denied or revoked. Let’s look at a few.

Expats & Americans Abroad

  • Risk: Many expats rely on passports for residency permits, work visas, and banking access abroad. A revoked passport can leave them stateless in practice.
  • Issue: IRS may still certify you even if you live outside the U.S. The law applies equally.
  • Example: I’ve represented expats in Europe who suddenly couldn’t renew their residency visas because their passport was frozen. Without quick decertification, they faced deportation.

Business Owners & Entrepreneurs

  • Risk: International contracts, supplier visits, and investor meetings depend on travel. Losing a passport can cost millions in business opportunities.
  • Issue: IRS often targets business owners for trust fund recovery penalties, which count toward the threshold.
  • Example: A client in Latin America had payroll tax issues. Certification nearly derailed a $10M contract until we expedited an IA.

Military Contractors and Airline Crew

  • Risk: Passports are job-critical. Contractors working in the Middle East or airline pilots based overseas may lose employment.
  • Issue: Employers often terminate contracts if you cannot maintain valid travel documents.
  • Example: I’ve seen airline crew members nearly grounded when DOS denied their passport renewal. We secured CNC status within two weeks to protect employment.

Retirees Abroad

  • Risk: Retirees in countries like Mexico or Costa Rica may lose access to healthcare or pension benefits tied to legal residency if they can’t maintain a valid passport.
  • Issue: Many retirees assume Social Security or Medicare protections apply abroad — they don’t cover passport issues.
  • Example: A client in Costa Rica discovered certification only when trying to renew residency. We resolved with CNC status after proving limited income.

11. Common Myths & Misconceptions

Because passport revocation is relatively new (2018 onwards), misinformation abounds. Here are the top myths I’ve encountered.

Myth 1: “If I pay down my balance below the threshold, I’m safe.”

Reality: Not true. Certification isn’t reversed until you either pay in full, enter an agreement, or qualify for an exclusion. A partial payment below $64,000 doesn’t trigger reversal.

Myth 2: “Only income tax counts.”

Reality: Wrong. Civil penalties such as the Trust Fund Recovery Penalty (TFRP) can trigger certification. If you were a responsible person for payroll taxes, those penalties apply.

Myth 3: “FBAR penalties count toward the threshold.”

Reality: False. FBAR penalties (for foreign account reporting) are specifically excluded. So are child support obligations.

Myth 4: “State Department will notify me before revocation.”

Reality: DOS can revoke without prior notice. The only IRS notice you’re guaranteed is CP508C (and Letter 6152 in some cases).

Myth 5: “My attorney or CPA will get the notice.”

Reality: Incorrect. CP508C goes only to the taxpayer’s last known address, not to your Power of Attorney. Many clients first learn of certification only when DOS denies their renewal.

Myth 6: “I can negotiate with the State Department.”

Reality: No. DOS acts only on IRS certifications. The fix must come through IRS reversal.

12. Practitioner Insight & Case Studies

To illustrate how this plays out in practice, here are a few anonymized examples from my files.

Case Study 1: The Entrepreneur Abroad

A client running a tech company in Germany discovered his passport renewal was denied. He owed over $300,000, mostly from unpaid estimated taxes. We:

  • Filed missing returns to establish compliance.
  • Negotiated a partial pay installment agreement.
  • Submitted proof of imminent travel.
    Within 14 days, IRS expedited CP508R, DOS released the hold, and his passport was renewed.

Lesson: Compliance plus a formal agreement works faster than litigation or partial payments.

Case Study 2: The Retiree in Costa Rica

A retiree living in Costa Rica had $70,000 in tax debt. She ignored IRS notices until her passport renewal was denied. With only Social Security income, she couldn’t pay. We:

  • Prepared a hardship analysis with Form 433-A.
  • Obtained “Currently Not Collectible” status.
  • IRS reversed certification within 30 days.
    Her residency renewal was approved, and she remained abroad.

Lesson: Hardship CNC can be a lifeline for retirees.

Case Study 3: The Airline Crew Member

An airline employee based in Dubai owed $150,000. CP508C arrived weeks before his passport expired. We:

  • Filed a streamlined installment agreement.
  • Sent proof of employment requirements.
  • Requested expedited processing.
    IRS reversed within 10 days, saving his job.

Lesson: Employment-critical travel can justify expedited decertification.

13. Why Litigation Is Rarely the Answer

Even though §7345 allows judicial review, few taxpayers choose this route. The main reasons:

  • Time: Litigation takes months or years. Passport issues are immediate.
  • Remedy is Limited: Courts cannot order DOS to issue a passport, only instruct IRS to notify DOS.
  • Costs: Litigation costs often outweigh the debt at issue.

For most taxpayers, the real solution is administrative resolution: getting into an IA, OIC, or CNC. Litigation is best reserved for cases where IRS certified despite a clear exclusion (e.g., bankruptcy pending, OIC already accepted).

14. Strategic Lessons

  • Don’t assume small actions (partial pay) solve certification.
  • Always get compliance current before filing agreements.
  • Keep proof of travel handy if expedited decertification is needed.
  • Remember your CPA or attorney will not automatically get CP508C — you must watch your mail.
  • If abroad, act immediately. Waiting until you’re denied at the airport is too late.

15. Frequently Asked Questions

Q1: How long after CP508C is my passport actually revoked?

  • There’s no fixed timeline. DOS can revoke anytime after IRS certification, but in practice, denials happen immediately on renewal applications, while revocations of valid passports often come later, sometimes after Letter 6152.

Q2: Can I travel internationally if my passport is still physically valid after certification?

  • Yes — until DOS revokes it. Certification itself doesn’t deactivate your passport. But renewal/extension requests will be blocked, and DOS may revoke without notice.

Q3: If I already bought plane tickets, will IRS expedite decertification?

  • Possibly. You must show proof of imminent travel (≤45 days) and have an open passport application with DOS. Only then can IRS expedite CP508R.

Q4: My balance is $65,000 today. If penalties and interest push it higher, will certification occur automatically?

  • Yes. The threshold includes penalties and interest, and IRS checks certification criteria weekly.

Q5: I paid $20,000 to bring my debt down to $62,000. Why am I still certified?

  • Because certification remains until the debt is either fully paid, in a formal IA, OIC, CNC, or otherwise excluded. Balance reductions below the threshold don’t trigger reversal.

Q6: I live abroad. Can DOS issue me a limited passport?

  • Yes, but only to return to the United States. Not for onward travel.

Q7: Does certification apply if I’m already in bankruptcy?

  • No. Debts in bankruptcy are excluded. If certified in error, you can request reversal immediately.

Q8: I submitted an Offer in Compromise. Am I safe?

  • Yes, if the OIC is officially pending (i.e., IRS accepted your application as processable). If it’s returned for errors, certification can continue.

Q9: What if I file an appeal of my OIC rejection?

  • While under appeal, you remain excluded from certification.

Q10: Does an innocent spouse claim protect me?

  • Yes, while an innocent spouse claim is pending.

Q11: Will my CPA or attorney automatically get CP508C?

  • No. IRS sends CP508C only to the taxpayer’s last known address. Practitioners do not get copies.

Q12: Can Tax Court force the State Department to issue my passport?

  • No. Courts can only order IRS to decertify; DOS acts independently.

Q13: Can I sue the State Department directly?

  • No. Courts have consistently dismissed suits against DOS over passports linked to tax debt. The remedy lies with IRS decertification.

Q14: Do joint liabilities count?

  • Yes. If you filed jointly, the IRS can certify either spouse if the liability is enforceable against both.

Q15: How often does IRS update DOS when reversing certifications?

  • By law, IRS must notify DOS within 30 days. Expedited cases can be faster, sometimes 7–21 days.

Q16: If I enter Currently Not Collectible (CNC), will IRS automatically reverse certification?

  • Yes. Once your account is formally placed in CNC, you no longer meet the definition of “seriously delinquent.”

Q17: Do state tax debts trigger certification?

  • No. Only federal IRS debts under §7345. State tax agencies have no passport revocation authority under this law.

16. Relevant .gov Links for Part III

Appeals & Judicial Review

Notices & Revocation Mechanics

State Department Role

Special Profiles & Taxpayer Assistance

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