What Is Considered Seriously Delinquent Tax Debt?

The term “seriously delinquent tax debt” represents a formal declaration by the Internal Revenue Service (IRS) that carries significant repercussions. This is not simply a past-due balance; it is a specific legal status triggered by failing to address a substantial federal tax obligation. This designation can directly impact a person’s ability to travel internationally, as the IRS will initiate a process with the U.S. State Department that can prevent a taxpayer from obtaining or using a passport.

The Official Definition of Seriously Delinquent Tax Debt

For a tax liability to be officially categorized as seriously delinquent, three specific conditions must be met. First, the tax debt must be legally enforceable, meaning the IRS has formally assessed the liability and the time to challenge the assessment in Tax Court has passed. This includes the initial tax plus all associated penalties and interest. The debt can stem from various sources, including individual income taxes or business-related taxes.

The second component is a specific monetary threshold that is adjusted annually for inflation. For 2025, a tax debt is considered seriously delinquent if the total amount owed exceeds $64,000. This figure encompasses the aggregate of tax, penalties, and interest.

The final requirement involves IRS collection actions. The IRS must have already initiated a formal collection process by either filing a Notice of Federal Tax Lien or issuing a levy to seize assets. Furthermore, the taxpayer’s rights to a Collection Due Process hearing to challenge the lien or levy must have either expired or been fully exhausted.

Consequences of Designation

Once a tax debt is classified as seriously delinquent, the IRS is mandated by law to certify that debt to the U.S. State Department. Upon receiving this notice, the State Department will deny any new passport application. The State Department also has the authority to revoke an existing passport, rendering it invalid for international travel.

Taxpayers are officially informed of this action through IRS Notice CP508C, which is sent by regular mail to their last known address. This notice formally states that the IRS has certified the taxpayer’s seriously delinquent tax debt to the State Department. For individuals living abroad, the State Department may issue a passport with limited validity, solely for the purpose of allowing direct return to the United States.

The State Department holds the certification for around 90 days before taking final action on an application, giving the taxpayer a window to contact the IRS. While revocation of an existing passport is discretionary, the risk remains for anyone with certified debt.

Exclusions from Seriously Delinquent Status

Certain situations prevent a tax debt from being classified as seriously delinquent, even if the outstanding balance is over the statutory threshold. These exclusions are designed to protect taxpayers who are actively working with the IRS to resolve their liability. A debt is not considered seriously delinquent if:

• It is being paid in a timely manner through an Installment Agreement approved by the IRS.
• It is part of an Offer in Compromise (OIC) accepted by the IRS, which allows a taxpayer to resolve their tax liability for a lower amount.
• A taxpayer has timely requested a Collection Due Process hearing in response to a levy notice, and that process is pending.
• The taxpayer has requested innocent spouse relief, which, if granted, would absolve one spouse of the tax liability.
• The debts are being addressed as part of a bankruptcy proceeding.

Resolving the Seriously Delinquent Designation

To reverse a seriously delinquent tax debt certification, a taxpayer must take specific actions to bring their account back into compliance. The most direct method is to pay the tax debt in full. Once full payment is confirmed, the IRS is required to reverse the certification within 30 days and notify the State Department.

For those unable to pay in full, entering into a formal payment plan is a primary resolution path. A taxpayer can apply for an Installment Agreement by filing Form 9465, Installment Agreement Request. Once the IRS accepts the agreement and the taxpayer makes timely payments, the seriously delinquent status is removed.

Another resolution is to have an Offer in Compromise accepted by the IRS. This involves submitting a detailed financial application using Form 656 and Form 433-A (OIC). If the IRS accepts the offer, the certification is reversed. Once the debt is no longer considered seriously delinquent, the IRS will issue a Notice CP508R to the taxpayer confirming the reversal and will update the State Department.