Your U.S. Passport, a Seriously Delinquent Tax Debt, and Living Overseas

Section 7345 of the Internal Revenue Code lets the IRS certify a seriously delinquent tax debt to the State Department, which can then deny a passport application or renewal, and can revoke or limit an existing passport. For someone living in the United States, that is a serious problem. For an American living abroad, it can be a crisis.

Here is how the rule works, and what Americans overseas need to know.

What counts as seriously delinquent

Section 7345(b) defines a seriously delinquent tax debt as an unpaid, legally enforceable federal tax liability of an individual that has been assessed, exceeds the statutory threshold, and for which a notice of lien has been filed and the related administrative rights have been exhausted or lapsed, or a levy has been made.

The threshold started at $50,000 and is adjusted for inflation:

• 2025: $64,000, under Rev. Proc. 2024-40.
• 2026: $66,000, under Rev. Proc. 2025-32. The IRS's passport page lists the same figure.

The IRS's page states that the debt includes assessed penalties and interest, not just tax.

What is excluded

Section 7345(b)(2) excludes debts being paid in a timely manner under an installment agreement or an accepted offer in compromise, debts for which collection is suspended because a Collection Due Process hearing on a levy has been timely requested or is pending, and debts for which collection is suspended because an innocent spouse election or request for relief is pending.

The IRS's passport page lists additional situations in which it will not certify a taxpayer, including taxpayers whose accounts are currently not collectible due to hardship, taxpayers with a pending installment agreement or offer in compromise request, victims of tax-related identity theft, taxpayers in bankruptcy, and taxpayers in federally declared disaster areas. Certification is postponed for taxpayers serving in a combat zone or participating in a contingency operation.

The notice you will receive, and where it goes

The IRS says it sends Notice CP508C by regular mail to your last known address when it certifies a debt, and that it does not send a copy to your power of attorney.

Here is the part most people miss. If your last known address with the IRS is an old U.S. address, a parent's house or an address you left years ago, the notice may never reach you. Many Americans abroad first learn about certification when they apply to renew a passport at a consulate. Keep your address current with the IRS, using Form 8822 if needed.

What happens when you apply for a passport

According to the IRS, when someone with a certified debt applies for or renews a passport, the State Department will hold the application open for 90 days to allow time to resolve the certification by paying in full, setting up a payment arrangement or correcting an error. If the issue is not resolved in that window, the application is denied and closed, and a new application is required.

If you are overseas, the IRS's page states that the State Department may issue a limited-validity passport that allows you to return directly to the United States. That protects your ability to come home. It does not protect your ability to keep living and traveling abroad.

Getting the certification reversed

Section 7345(c) requires the IRS to notify the State Department when a certification was erroneous, or when the debt is fully satisfied or becomes legally unenforceable, or no longer qualifies as seriously delinquent. That includes entering into an installment agreement or having an offer in compromise accepted.

The IRS says it will reverse certification and notify the State Department within 30 days of the debt being resolved. It also describes expedited handling: if you have an open passport application or renewal, and you tell the IRS that you live abroad or that you have travel within 45 days, it can often shorten the process to about 9 to 16 days. When it reverses certification, the IRS sends Notice CP508R.

The CP508C notice lists phone numbers for questions. The IRS's passport page gives an international number, 267-941-1004, for taxpayers outside the United States.

Challenging an erroneous certification

Section 7345(e) gives a taxpayer who has been notified of a certification the right to bring a civil action against the United States in a federal district court, or against the Commissioner in the U.S. Tax Court, to determine whether the certification was erroneous or whether the IRS failed to reverse it. If the court finds an error, it can order the IRS to notify the State Department. Whichever court first acquires jurisdiction has sole jurisdiction.

Most cases are resolved administratively, by fixing the underlying debt. But if the debt was already in an excluded status when it was certified, the court route exists.

How debts this large build up abroad

Most Americans abroad who reach the passport threshold did not get there by owing a large tax on a filed return. They got there through years of silence. When returns go unfiled, the IRS can prepare substitute returns from the information it has, and those often ignore the exclusion and credits that would have reduced the tax. Penalties and interest accrue on top. A lien is filed or a levy is issued, and the debt becomes seriously delinquent.

That history matters because the remedy is often different from what people expect. Before negotiating a payment plan on a number that may be wrong, it may be possible to file original returns that replace the substitute assessments with the real figures. For people who also have FBAR and information return problems, the Streamlined Foreign Offshore Procedures can bring everything current at once.

An example timeline

A U.S. citizen living in Thailand stopped filing years ago. The IRS assessed tax based on substitute returns, filed a notice of federal tax lien, and the balance with penalties and interest grew past the threshold. A CP508C was mailed to her old U.S. address, and she never saw it. She applies to renew her passport at the embassy, and the application is placed on hold.

Within the 90-day hold, she has options. She can request an installment agreement, which keeps the IRS from certifying while the request is pending and removes the debt from seriously delinquent status once it is in place and being paid. She can contact the IRS using the international number, tell it she lives abroad and has an open application, and ask for expedited reversal once the debt is resolved. And she can start the work of filing real returns to correct the underlying assessments.

A practical plan for Americans abroad

• Check your IRS balances before your passport is due for renewal. Do not wait until you are at the consulate.
• Update your address with the IRS so certification notices reach you.
• If the balance is above the threshold, a timely-paid installment agreement or an accepted offer in compromise takes the debt out of seriously delinquent status. Even a pending installment agreement or offer request keeps the IRS from certifying, according to its own page.
• If you are already certified, resolve the debt and ask for expedited reversal, noting that you live abroad and have an open passport application.

Many tax debts held by Americans abroad come from years of missed filings, where the IRS filed substitute returns or assessed penalties. Sometimes the right first step is filing the real returns, which often show far less tax once the foreign earned income exclusion and foreign tax credits are applied. You can learn more about IRS payment options on my main practice site.

Your passport is your lifeline abroad. If it is at risk, let's talk now.