What Does the IRS Define as “Seriously Delinquent”?

Posted on November 09, 2021

The IRS takes several steps to get taxpayers to fulfill their tax-related responsibilities. It starts with a balance notice, followed by friendly reminders to pay. If the IRS has questions about your tax return, they may even send you a letter asking for additional information. But if you decide not to pay, do not agree to a payment plan, or have completed the process to achieve “currently not collectible” status, the IRS won’t sit back. And when your liabilities start to add up due to penalties and interest, a point may arrive that the IRS will consider you as “seriously delinquent.” According to the IRS, you are “seriously delinquent if:

You have unpaid, legally enforceable federal tax debt amounting to more than $54,000.
The IRS has exhausted all administrative remedies under the Internal Revenue Code Section 6320, which have all since lapsed.
You have been issued a levy.
The IRS has filed a federal tax lien notice on your account.

What are the consequences of being classified as “seriously delinquent”?

The IRS will alert the U.S. Department of State that you are “seriously delinquent.” To ensure you face your responsibilities and settle your liabilities, the government will take measures to prevent your international travel. This includes not allowing you to renew your passport. If you have a current and valid passport, they may place limitations or revoke it.

If the IRS has determined that you are a “seriously delinquent” taxpayer, you will likely receive a CP508C notice. The purpose of the CP508C is to notify you that your account has been certified as seriously delinquent to the U.S. State Department. The notice comes with a 30-day deadline to dispute the taxes you owe, dispute the penalties, or make arrangements to pay.

Can I have a seriously delinquent certification reversed?

There are various ways to reverse your classification as seriously delinquent, starting with paying your debt in full. If you cannot, you can enter into an installment agreement with the IRS. To satisfy your debt, the agency also accepts an offer in compromise. You may also have the certification reversed if you can prove you have certified debt; for example, you are the victim of tax-related identity theft, in bankruptcy, or live within an area that has been federally declared as a disaster area. And if you qualify, you can go through the process of achieving “currently not collectible” status.

Once your seriously delinquent certification has been reversed, you should receive the CP508R, which also lets you know that the U.S. State Department has also been notified of the reversal. However, receiving the CP508R does not mean you no longer have tax debt. You may still have an obligation that you will need to pay in a timely manner, either under an installment agreement or offer in compromise. Depending on your circumstance, it may mean a collection due process hearing has been requested.

Have you been classified as “seriously delinquent” and received a CP508C? Even if you feel that the revocation or limitations of your passport have no effects on your travel plans, you should still take the notice very seriously.

For help with tax resolution, contact us at 206-970-4477 and let us help you with your tax problems. Talk with a Tax Resolution Expert today. Let us help you determine the tax resolution strategy that can help prevent you being classified as “seriously delinquent” by the IRS.