IRS Notice CP508C: What To Do If Your Passport Is In Jeopardy

IRS Notice CP508C is the Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the State Department — that is, the notice that the IRS sends to notify you that it has “certified” your tax debt to the U.S. Department of State as seriously delinquent.

This certification with the State Department certainly means that you will be unable to apply for a new passport or renew your existing or expired passport until the IRS decertifies your tax debt with State, and it could mean that your passport will be revoked (although this is less likely).

Once the IRS has certified your tax debt to the State Department, it is required under Internal Revenue Code Section 7345(d) to “contemporaneously” notify you of the certification, and the CP508C Notice you are holding in your hand meets this requirement.

That said, there is hope. While paying off your tax debt in full is probably the fastest way to get your tax debt decertified with the State Department, there are other avenues that will be discussed later in this article.

Here is a redacted Notice CP508C that the IRS sent to one of our clients.

IRS Notice CP508C At a Glance

IRS Notice CP508C Explained, Part by Part

Here is a full explanation of the Notice CP508C, part by part.

Part 1: Notice and Amount Due

As usual, the big bold words at the top of the notice provide you with a summary of what the notice is about; in this case, the 508C is your “notice of certification of your seriously delinquent federal tax debt to the U.S. Department of State.”

Below these big bold words are even bigger bold words letting you know the amount of the tax debt that it has certified to the State Department — your “amount due.” Note that your actual total balance may be larger than this amount — for example, if you recently filed a tax return and the IRS hasn’t certified that debt to the State Department yet but had certified older debt at a previous point in time.

Then in the smaller text below this, the IRS provides more information about the “certification” process, such as:

• Its statutory authority — Internal Revenue Code Section 7345, which was enacted as part of the Fixing America’s Surface Transportation (FAST) Act in 2015.
• Its requirement — that the IRS notify the State Department whenever a taxpayer owes a “seriously delinquent” tax debt.
• Its effect — prohibiting the State Department from issuing or renewing a passport to a taxpayer who has been certified as owing “seriously delinquent” Tax debt.

To the right of this smaller text is your billing summary, which break downs the amount of your tax debt that the IRS has certified to the State Department as seriously delinquent as well as any penalties and interest that have accrued on that amount.

Part 2: What The IRS Needs You To Know

Next, the IRS will tell you what, in its opinion, you need to know upon receiving your CP508C Notice.

This information is broken down into three sections:

1. The definition of seriously delinquent tax debt, which is tax debt that totals more than $62,000 (as of the time of the notice pictured above, the amount was $59,000) and concerning which the IRS has either filed a Notice of Federal Tax Lien (and your administrative rights to contest the lien have been exhausted) or issued a levy to connect the debt.
2. The situation if you apply for a passport or passport renewal while having seriously delinquent tax debt
3. That the State Department may go so far as to revoke your current passport due to your seriously delinquent tax debt

Part 3: What the IRS Says You Need to Do 

Then, the IRS will tell you what, in its opinion, you need to do upon receiving your Notice CP508C depending on your disposition toward the information shared in the notice.

To Prevent Passport Limitations

To prevent the State Department from denying, revoking, or limiting your passport, you must either:

• Pay the full amount of debt that the IRS has certified to the State Department, or
• Enter into some kind of resolution with the IRS regarding this debt

Doing either of these things will cause the IRS to decertify your tax debt with the State Department — that is, inform the State Department that your tax debt is no longer considered seriously delinquent.

If You Disagree With the Balance Due

Under this (brief) heading, the IRS informs you that if you’ve already paid off the tax debt indicated on the notice, you should send them proof of that payment so your passport issues can be cleared.

If You Want to Contest the Certification For Another Reason

If you disagree with the balance for another reason, call the IRS at the numbers provided at the top of your notice.

You can also take civil action in court and contest the certification there.

If You Have a Power of Attorney

Additionally, if you have a power of attorney, you will need to contact them about the notice since the IRS will not alert them when they send this notice.

Part 4: Your Billing Details

Next, the IRS will provide you with two billing summaries. One is for your personal records, while the other is to be returned with your payment. The billing summaries will have the amount you owe, interest, and a failure to pay penalty for each year you owe on your taxes.

It will not sum them for you. Your outstanding debt will be all the totals added together.

Additionally, it will tell you which form is associated with your tax debt. In this case, it is the 1040 form. This will be the last part of your notice, and unlike others, there is no attached payment coupon. You will have to pay the IRS via check or money order.

Do not forget to include your TIN on your payment and send payment to the provided address.

Why Does the IRS Send Notice CP508C?

The IRS sends Notice CP508C because it is statutorily required to inform you when it certifies your tax debt as seriously delinquent to the State Department.

What You Should Do If You Receive a CP508C

Below are steps for you to take after you receive a CP508C Notice from the IRS.

Step 1: Confirm You Actually Owe The IRS

The obvious first step is to make sure you actually owe the IRS. It’s easy to get caught up in panic when the IRS sends you a notice claiming you owe an impossible amount of money. However, it makes mistakes, and you need to take a step back and check on the legitimacy of those claims.

The IRS is claiming you haven’t filed your taxes. Is that true? Did you file, but they either didn’t receive your payment or process it?

We cannot stress this enough. Always double-check your CP508C Notices. Check your penalties and the legitimacy of their claims.

Step 1a: Dispute the Charges if the IRS is Wrong

If you found an irrefutable error in your CP508C Notice, then contact the IRS at the provided phone number. It’s important to do this sooner rather than later, especially since you only have 30 days from the date of the notice to pay off your debt.

Unfortunately, you should get ready to tell the same story multiple times over since the IRS isn’t known for speed. You’ll have to make multiple phone calls to multiple people to try and get your bills sorted.

The process is long and difficult, so we do this on behalf of our clients. While it’s annoying, it’s your right to dispute things and will save you money in the long run.

Step 2: If You Can Pay In Full, Do So

You will have about 30 days from the date of the notice to pay off your balance before the IRS takes further action.

Again, if you can dispute any of the charges with the IRS, do so. This needs to happen as soon as possible.

However, the fastest way to clear your name with the IRS and halt any new penalties from appearing is to pay everything off.

Step 3: Seek Penalty Abatement From the IRS

For those who cannot pay, penalty abatement is an option worth looking into. Penalty abatement allows you to appeal the charges the IRS has against your account to possibly remove or reduce what you owe. It’s highly effective if you qualify.

Not everyone qualifies, so it’s not a guaranteed solution, but it never hurts to check.

Choice Tax Relief will always attempt to seek some penalty abatement for our clients.

Step 4: Seek Tax Relief

If you’ve done everything possible to plead your case with the IRS and still can’t afford your balance, consider seeking tax relief — that is, getting into a resolution with the IRS.

Doing so will not only protect you from levy action such as wage garnishments and bank levies but will also free up your passport.

The timeline won’t be the clearest, but it will help you as you think through your balance.

The IRS is usually willing to set up some sort of payment plan to allow you to pay it back over a longer period of time and alleviate the tax burden on your business.

Another option is known as an offer in compromise (OIC). An OIC is the next best solution. It allows you to settle your tax debt for less than you owe. It’s an incredibly effective and positive solution for you, allowing the tax debt to be alleviated.

Since an OIC isn’t a feasible option for everyone, the IRS provides other alternatives. Things like the previously mentioned installment payments are highly effective, alongside temporary hardship placements (called currently not collectible status).

A “not collectible status” will halt any IRS action against your account and you for a predetermined amount of time. It will give you some time to save and prepare to pay it off. Unfortunately, it will not make the penalties or payment go away.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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