New Transportation Bill, FAST, Adds Some Tax Provisions (12/7/15; 2/27/16)

This blog entry was substantially revised on 2/27/16 to incorporate the revisions I just made to my Federal Tax Procedure text:

XIII. Denial or Revocation of Passport for Seriously Delinquent Tax Debt.. 

Section 7345(a) [here] and 22 U.S.C. § 2714a [here], added in late 2015, require that, upon the IRS certification transmitted to the Secretary of State (through the Secretary of the Treasury) an individual has “a seriously delinquent tax debt,” the Secretary of State “shall not issue a passport” to the individual and, if a passport has already been issued, "may revoke" the individual's passport. n2234   A “seriously delinquent tax debt” is an assessed tax debt greater than $50,000 if a notice of  tax lien has been filed with CDP rights exhausted or lapsed or a levy under § 6331 has been made. n2235  Exceptions are made for debts for debts that are being paid “in a timely manner” pursuant to agreement with the IRS or which are subject to either a CDP hearing or an election for innocent spouse relief under § 6015. n2236 The IRS must “contemporaneously notify an individual of any certification under subsection (a).” n2237 The notice shall include notice of the certification and of the right to bring a civil action in the district court or Tax Court to contest whether the certification was erroneous. n2238  The certification must be reversed if the certification was erroneous, the tax debt is fully satisfied or the tax debt ceases to be a seriously delinquent tax debt as defined. n2239  The required notices of tax liens and notices of levy must include notice of § 6345's authority to deny or revoke passports. n2240 The Secretary of State may approve exceptions to these requirements in “emergency circumstances” or for “humanitarian reasons” n2241 or may limit the passport only for return to the U.S. n2242  Finally, apart from a seriously delinquent tax debt certification, the Secretary of State may deny a passport for failure to provide a valid Social Security Number. n2243.
   n2234 § 7345(a); and 22 U.S.C. § 2714a(e)(1).
   n2235 § 7345(b)(1). Like many of provisions of the Code, the amount is adjusted for inflation.  § 6345(f).
   n2236 § 7345(b)(2).
   n2237 § 7345(d).
   n2238 § 7345(e).
   n2239 § 7345(c)(1) (reversal of certification if error or debt paid or ceases to be a seriously delinquent tax debt) &(e)(2) (judicial determination of erroneous certification); 22 U.S.C. § 2714a(g).
   n2240 FAST Act § 32101(b), amending § 6320(a)(3) and § 6331(d)(4) to add this requirement.
   n2241 22 U.S.C. § 2714a(e)(1)(B) & (f)(1)(B).
   n2242 22 U.S.C. § 2714a(f)(2)(B). n2243 22 U.S.C. § 2714a(f)(1).

Other Provisions of FAST ACT

The other provisions of the bill are important but probably not of much interest to the readers of this blog.  The renewal of outsourcing of debt collection to private debt services is, I think, odd but not unexpected in today's political environment.  Without getting into the details, it seems to apply only to those debts which, from a collection perspective, are delinquent in the collection cycle and thus would require major IRS resources to collect.  For those debts, perhaps, it may make sense to permit some private debt collectors -- acting under proper safeguards spelled out in the statute -- expend their own resources to chase after the debts.  For more comment on the new provision, see Robert M. Wood, IRS Private Debt Collectors Are Now Legal: 10 Things You Should Know (Forbes 12/1/15), here.