IRS withdraws proposed passport revocation rules for delinquent taxpayers

The Internal Revenue Service has withdrawn a notice of proposed rulemaking that would authorize the State Department to disclose tax returns and return information to its contractors who help carry out responsibilities related to revoking or denying a passport of anybody certified to have a seriously delinquent tax debt. 

In REG-129260-16, the IRS and the Treasury Department withdrew the notice of proposed rulemaking, saying it has been determined to be unnecessary. The rules would have pertained to a provision of the Fixing America’s Surface Transportation (FAST) Act or 2015 that requires the IRS to notify the State Department about any tax debt of an individual that the IRS certifies as seriously delinquent.  Section 32101(e) of the FAST Act requires the State Department to deny such people a passport (or the renewal of a passport) if the IRS notifies the State Department that the individual has been certified as having a seriously delinquent tax debt.  Section 32101(e) of the FAST Act also allows the State Department to revoke a passport previously issued to such a person.  

The proposed regulations are considered to be unnecessary because the State Department is already authorized to disclose tax returns and return information to its contractors providing services in connection with the revocation or denial of passports pursuant to the FAST Act and section 7345, so long as the IRS authorizes the disclosure in writing and the disclosure conforms to the other provisions of Section 301.6103(n)-1 of the Tax Code.  Under that section, if an officer or employee of the Treasury Department has disclosed returns or return information to the State Department for purposes of the provision of services in furtherance of tax administration, then the State Department may further disclose the returns or return information, when authorized in writing by the IRS, to the extent necessary to carry out the tax administration purpose.  Under that section of the Tax Code, that may include disclosures to an agent or subcontractor of the person, or officer or employee of the agent or subcontractor.