The Tax Times: TC Determines That Taxpayer's Debt Was 'Seriously Delinquent' Even after He Paid Tax to Reduce Balance below $50,000

Tuesday, March 25, 2025

TC Determines That Taxpayer's Debt Was 'Seriously Delinquent' Even after He Paid Tax to Reduce Balance below $50,000

A Florida man's tax debt was property certified by the Internal Revenue Service as "seriously delinquent" and reported to the U.S. secretary of state to bar him from obtaining or renewing a passport, the U.S. Tax Court said on March 18, 2025.

Drew J. Pfirrman filed his 2018 federal income tax return, on which he reported no tax due.

The IRS later concluded that he had received $367,628 in unreported income stemming from dividends and the disposition of certain securities. In late 2020 the IRS sent a Notice CP2000 to Mr. Pfirrman that proposed an income tax adjustment of $111,460, as well as an accuracy -related penalty of $22,292 and statutory interest of $10,124. These amounts were assessed on February 15, 2021.

In March 2023 the IRS sent Mr. Pfirrman, at his last known address, a Notice CP508C, Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the U.S. Department of State (Notice of Certification). At that point Mr. Pfirrman's assessed liability totaled $182,687.

The Notice of Certification advised Mr. Pfirrman that the IRS had made a section 7345 certification with respect to his unpaid 2018 tax liability, that the State Department had been notified of the section 7345 certification, and that the State Department could revoke his passport or refuse to issue him a new passport based on the section 7345 certification. Mr. Pfirrman petitioned this Court under section 7345(e).

On the record at the time of certification Mr. Pfirrman's liabilities met the statutory definition of "seriously delinquent tax debt." Mr. Pfirrman has not claimed that either of the statutory exceptions apply. See Adams II, 122 F.4th at 434. It is uncontested that the IRS served Mr. Pfirrman with notice of its collection actions and his administrative rights over multiple years.

Mr. Pfirrman took no action to timely contest the tax liens or underlying deficiency determinations.

Only Much Later, after His Passport Was In Jeopardy,
Did He Attempt To Dispute The IRS Collection
And Enforcement Actions.

Section 7345 plainly forecloses such an eleventh-hour collateral attack on a person's underlying tax liabilities. Mr. Pfirrman's Remaining Argument, in addition to questioning his underlying tax liability.

Mr Pfirrman Also Suggests That He Has Made
Payments That Have Dropped The Liability
"Below The Threshold of This Court Review."

Mr. Pfirrman misunderstands the statutory structure.

Once a certification of a seriously delinquent tax debt has been made, it may be reversed "if the debt with respect to such certification is fully satisfied." I.R.C§ 7345(c)(1) (emphasis added).

Unless a taxpayer satisfies the section 7345(b)(2)(A) exception, a partial payment does not justify reversal of a certification or otherwise end the matter, even if the partial payment drops the amount of the unpaid, assessed, and legally enforceable liability below the 20 23 threshold for certification of a seriously delinquent tax debt.

The Court held that the certification of Mr. Pfirrman as a taxpayer owing a "seriously delinquent tax debt" was not erroneous and granted summary judgment for the Commissioner.

If You Have Serious Delinquent IRS Debt, You Should Consult with Experienced Tax Attorneys, As There Are Several Ways Taxpayers Can Avoid Having the IRS Request That the State Department Revoke Your Passport.