Failure of Owner to Deposit Employment Taxes Results in Passport Loss

If a taxpayer has a seriously delinquent federal tax, the IRS can certify on Notice CP508C this fact and send it to the State Department. The State Department can then refuse to issue a passport or revoke an outstanding one. A “seriously delinquent tax debt” is a federal tax liability that has been assessed, exceeds $50,000 as adjusted for inflation ($64,000 in 2025; $66,000 in 2026), is unpaid and legally enforceable, and with respect to which a lien notice has been filed or a levy made. In one recent Tax Court case, an owner with more than $16 million in unpaid federal trust fund penalties (undeposited withholdings from employees for income taxes and their share of FICA) lost his bid to object to the IRS’s certification of his seriously delinquent federal tax. The fact that he wanted to arrange an offer in compromise didn’t help because it was never established. #IdeaoftheDay

Don’t miss the new blog post today!