Franklin v US is the latest case considering the constitutionality of the IRS and State Department power to restrict international travel when a taxpayer has seriously delinquent tax debt, i.e., legally enforceable federal tax debt totaling more than $55,000 (including interest and penalties).
Franklin failed to report his beneficial ownership of a foreign trust, triggering hefty penalties under Section 6676. Following assessment and nonpayment, the IRS certified to the Department of State that Franklin had a “seriously delinquent tax debt.” That led the State Department to revoke Franklin’s passport.
read more...I note but will not discuss that in addition to his claim that the passport revocation scheme violated his 5th Amendment due process rights, Franklin raised other challenges to the 6676 penalty. The Fifth Circuit held that those challenges ran afoul of the Anti-Injunction Act.
The main part of the Franklin opinion addresses the claim that the government’s power to restrict travel violated Franklin’s substantive due process rights. Substantive due process “protects individual liberty against ‘certain government actions regardless of the fairness of the procedures used to implement them.’” Collins v. City of Harker Heights, 503 U.S. 115, 125 (1992) (quoting Daniels v. Williams, 474 U.S. 327, 331 (1986)).
The Fifth Circuit disagreed with Franklin. In so doing, it parsed a number of Supreme Court cases that have explored whether there is a fundamental right to international travel. That inquiry is important, because if government action impinges on a fundamental right, the court applies “strict scrutiny” to the legislation, and governmental restriction of a fundamental right must be “narrowly tailored to serve a compelling state interest.” Washington v. Glucksberg, 521 U.S. 702, 720–21 (1997).
In the absence of a fundamental right, typically the court applies a rational basis test, and the “restriction at issue survives as long as it is ‘rationally related to a legitimate government interest.’” quoting Reyes v. N. Tex. Tollway Auth., 861 F.3d 558, 561 (5th Cir. 2017). The Fifth Circuit held that while there is a fundamental right to interstate travel there is no similar fundamental right to international travel. In so doing, the opinion discusses how courts view whether a right is fundamental:
[W]hether that right is “‘deeply rooted in this Nation’s history and tradition’ . . . and ‘implicit in the concept of ordered liberty,’ such that ‘neither liberty nor justice would exist if [the right was] sacrificed.’” Glucksberg, 521 U.S. at 721 (first quoting Moore v. City of E. Cleveland, 431 U.S. 494, 503 (1977), then quoting Palko v. Connecticut, 302 U.S. 319, 325, 326 (1937)). The Supreme Court has cautioned that, because declaring a right as fundamental “to a great extent . . . place[s] the matter outside the arena of public debate and legislative action,” courts should “exercise the utmost care whenever [they] are asked to break new ground in this field.” Id. at 720 (quoting Collins, 503 U.S. at 125).
For sure there is lots of room for debate on whether something is deeply rooted in history and tradition or implicit in the concept of ordered liberty. And the Fifth Circuit acknowledged some earlier Supreme Court opinions that framed international travel as a fundamental right, though it pointed to later opinions that distinguished travel within the states as compared to travel to differing countries. For example in Haig v Agee, the Supreme Court made that distinction when considering the revocation of the passport of an ex CIA agent who threatened to reveal secrets:
“[T]he freedom to travel outside the United States must be distinguished from the right to travel within the United States.” 453 U.S. 280, 306 (1981).
The Fifth Circuit acknowledged that other opinions that have considered the constitutionality of Section 7345 have applied an intermediate type scrutiny, recognizing the importance of the right to international travel (Keith discussed one of those cases, the 10th Circuit’s Maehr v US, in Passport Revocation Cases Part 2). Intermediate scrutiny requires that the challenged restriction “must serve important governmental objectives and must be substantially related to achievement of those objectives.” Craig v. Boren, 429 U.S. 190, 197 (1976).
In acknowledging the importance of all travel the opinion states that “Franklin is correct in his assertion that the right to international travel is not a new creation unmoored from our past, but instead can be traced through the ages from Magna Carta to Blackstone to the Declaration of Independence to the modern Universal Declaration of Human Rights.”
While declining to decide whether it should be required to apply rational basis or intermediate level scrutiny, the opinion stated that even under intermediate scrutiny it would find the scheme constitutional. The money paragraph in the opinion essentially ties the revocation powers to the essential government interest in collecting revenue:
Even under the higher standard of intermediate scrutiny, the FAST Act’s passport-revocation scheme is constitutional. The government’s interest in collecting taxes, which animates the FAST Act’s passport-revocation scheme, is undoubtedly an important one. See, e.g., Hernandez v. Comm’r, 490 U.S. 680, 699 (1989) (“[E]ven a substantial burden would be justified by the ‘broad public interest in maintaining a sound tax system’” (quoting United States v. Lee, 455 U.S. 252, 260 (1982))); Flora, 362 U.S. at 154 (“It is essential to the honor and orderly conduct of the government that its taxes should be promptly paid[.]”). The passport-revocation scheme is also clearly connected to that goal: delinquent taxpayers will be well-incentivized to pay the government what it is owed to secure return of their passports, and those same taxpayers will find it much more difficult to squirrel away assets in other countries if they are effectively not allowed to legally leave the country. (emphasis added).
The opinion notes as well that the passport revocation statute targets larger tax debtors and thus “does not sweep beyond what is necessary to achieve Congress’s goal of trying to recoup the $5.8 billion or more in delinquent taxes owed to the government.”
The opinion continues on the theme that the legislation is targeted:
[W]hat Congress provided was an arrow, not a bazooka. Its chosen tool is carefully aimed at the problem, not fired indiscriminately with grave risk of collateral damage to the rights of those not covered by the scheme.
Conclusion
This is the third circuit to uphold the constitutionality of the passport revocation statute, and while it acknowledges that international travel is not to be taken lightly, the opinion is a major government victory for an important collateral tool to collect from taxpayers who have failed to pay sizable liabilities.
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When this gets to the Supreme Court, as it should, the passport revocation scheme will be ruled unconstitutional, for at least two reasons. The technical reason is that unless and until there has been a final determination of the debt that the taxpayer owes, the government has no right to apply coercion by confinement. The broader reason is that a passport is an administrative document proving identity and citizenship, not evidence that the government has decided to grant the bearer the right to travel. The sordid history of authoritarian regimes includes the imposition of impossible-to-pay exit taxes (sometimes couched as repayment of the value of education received) as a condition to getting an exit permit. The right of a citizen to travel, to return to his country and to leave a country permanently, all clearly fundamental, cannot be subordinated to a monetary debt owed to the government. If they can be subordinated to taxes, then the government could require repayment of the value of schooling or other real and supposed benefits, or could demand a clean bill of health from all known creditors and a waiting period for unknown creditors to surface either to leave the country or to return. That is not where we want to be.
Robert,
I don’t share your confidence in this iteration of the Supreme Court overturning the passport revocation scheme for delinquent tax debtors, especially given its recent lack of concern for protecting individual liberties.
With the way the supreme court is today, you never know. Most of their rulings have been in favor of government, but some of their rulings have been good for people. Supreme court can be the wild card. The case should go to the supreme court.
What about Kent v. Dulles???
Sarah, the opinion cites Kent v Dulles (involving Sec of State denying passports to members of Communist party), as well as two other cases that framed int’ travel as a fundamental right but minimized them in light of later cases:
“However, later Supreme Court decisions have consistently and decisively refuted these earlier suggestions, going to great pains to separate the right to international travel from the fundamental right to interstate travel. In Califano v. Aznavorian, the Court noted that its past cases “often pointed out the crucial difference between the freedom to travel internationally and the right of interstate travel.” 439 U.S. 170, 176 (1978).”