Yesterday, I discussed two recent passport revocation cases, United States v. Hupp and Franklin v. United States. Today, I look at Tenth Circuit and Tax Court cases involving similar issues decided earlier this year.
read more...Rowen
The Tax Court decision in Rowen v. Commissioner, 156 T.C. No. 8 (2021) addresses the constitutionality of the passport revocation provision from the perspective of the power that IRC 7435 gives to the IRS. Because it finds that the IRS does not play a decisive role in restricting a taxpayer’s right to international travel, the Tax Court grants summary judgment to the IRS on the constitutional argument.
The Rowen case provides some reason for believing that the taxpayer in Maehr had the right idea to sue the State Department rather than the IRS. The Tax Court states that Mr. Rowen’s argument that IRC 7345 violates the 5th Amendment right to international travel has no merit because:
The plain text of section 7345 imposes no prohibition on international travel. Section 7345 merely provides a process by which the Commissioner may certify to the Secretary of the Treasury the existence of a seriously delinquent tax debt and the Secretary of the Treasury in turn transmits that certification to the Secretary of State. Section 7345 expressly leaves all passport-related decisions for “action” by the Secretary of State.
Since the statute does not give the IRS power to revoke someone’s passport, the IRS has not violated anyone’s due process rights by simply certifying a case to the State Department. The court also notes that on the record of this case there is no indication that the State Department has actually revoked his passport.
Mr. Rowen also argued that IRC 7345 violates the Uniform Declaration of Human Rights. The Tax Court does not agree that IRC 7345 violates the provisions of this treaty but finds that even if it were to violate that treaty, the section does not impose limits on international travel.
After addressing two other issues raised in the petition but not argued, the Tax Court grants summary judgment to the IRS. It’s clear that a constitutional argument will go nowhere at the IRS or the Tax Court. For taxpayers who want to make a constitutional argument regarding IRC 7435, coming to Tax Court will merely be a way station on the road to a circuit court.
Maehr
We have not previously discussed Maehr v. U.S. Dep’t. of State, 5 F.4th 1100, 1119 (10th Cir. 2021) decided in July of 2021. Of the four cases, it takes the most serious look at the constitutional argument and provides, perhaps, the most hope for future litigants. Rather than suing the IRS, Mr. Maehr sued the State Department for deciding to revoke. There the 10th Circuit said:
Passport revocation under the FAST Act is thus an example of a species of tax penalties known as collateral sanctions. “Unlike traditional tax penalties that require noncompliant taxpayers to pay money to the taxing authority, collateral tax sanctions require noncompliant taxpayers to forfeit a nonmonetary government benefit or service.” Joshua D. Blank, Collateral Compliance, 162 U. Pa. L. Rev. 719, 728 (2014). They “increasingly apply to individuals who have failed to obey the tax law,” perhaps because they “can promote voluntary tax compliance more effectively than the threat of additional monetary tax penalties.” Id. at 720. States and the federal government impose a variety of collateral tax sanctions, ranging from diminished housing assistance to the cancelling of driver’s licenses. Id. at 739-40. Passport revocation had not been used to thwart tax delinquency until the FAST Act, but it has been used in the context of non-payment of child support. See 42 U.S.C. § 652(k).
The court first addressed Mr. Maehr’s Privileges and Immunities clause argument. It finds this argument implausible because:
These clauses apply to states, not the federal government, and Maehr can articulate no way around this fact. Even if the clauses could somehow constrain the federal government, no Supreme Court decision has ever interpreted these clauses as at all relevant to a right to international travel.
Next, Mr. Maehr makes an argument based on the writ ne exeat republica. I discussed this extraordinary writ here. This writ allows the government to keep someone from departing or sending their assets out of the US. It’s a form of civil arrest and in many circuits requires the government to meet the four factor test for a preliminary injunction. Mr. Maehr wants the court to require the same type of finding with respect to passport revocation that is required by case law regarding the writ ne exeat republica. The court declines, stating:
Writs of ne exeat differ significantly from FAST Act passport revocations in three ways. First, the scope of ne exeat is much broader, restricting freedom of movement domestically as well as internationally. Second, writs of ne exeat can be issued even if the underlying tax debt is contested by the taxpayer, see, e.g., Shaheen, 445 F.2d at 10, whereas the FAST Act requires that the taxpayer’s rights to challenge a contested liability have lapsed or been exhausted prior to passport revocation. I.R.C. § 7345(c). Third, ne exeat is an essentially equitable common law remedy that has been codified in statute, making it sensible that courts have required showings of evidence paralleling those required for preliminary injunctions. Passport revocation under the FAST Act, in contrast, is a purely statutory and legal scheme with built-in due process protections.
Next, Mr. Maehr argued that the passport revocation infringed his right to travel in violation of substantive due process. The court spends a fair amount of time discussing the history of the right to international travel for citizens of the US as it searches for the appropriate level of scrutiny. The court states:
My review of Supreme Court precedent discerns a standard that clearly falls somewhere between rational basis and strict scrutiny. As I read it, the rule the Supreme Court has both announced and remained faithful to is as follows: substantial restrictions on international travel must advance a “legitimate and substantial” interest and must not sweep much more broadly than necessary. Aptheker, 378 U.S. at 508, 84 S.Ct. 1659 (quotation omitted). That rule closely resembles the language used to describe intermediate scrutiny.
Neither party argued for intermediate scrutiny and provided the court with a basis for evaluating how it would apply here. Under those circumstances, the court decides to uphold the decision of the district court which dismissed his claim on this point as well. So, Mr. Maehr does not come away with a victory.
The 10th Circuit seems to leave the door ajar for an attack on the passport revocation power under intermediate scrutiny. It did not make a positive decision that the statute passed the test under that scrutiny. The 10th Circuit’s decision suggests the possibility that if intermediate scrutiny was applied to the State Department’s role under the statutory scheme, the statute may not satisfy the constitutional requirements; however, I think that outcome is unlikely based on the precedent in the unpaid child support cases that formed part of the basis for this statute and because the 10th Circuit’s decision did not crack the door open very far. The statute is young. More litigation will occur, perhaps taking the issue to the Supreme Court. Because most of the litigants present fairly unsympathetic situations, persons interested in advancing these arguments might search for someone who will evoke more sympathy than Mr. Maehr or Mr. Rowen.
To continue this discussion, I will re-post my comment from yesterday, slightly modified:
2 USC section 2714a(e)(1)(B) allows exceptions for humanitarian or emergency grounds. It is too vague to pass constitutional muster. Likewise subsection (e)(2)(B) provides no standards for limiting the validity of a passport to return travel to the US. The court in Rowan stated: “The constitutionality of the authority granted to the Secretary of State by FAST Act section 32101(e) is not before us, and we express no view on that issue.” And apparently the Sec’y of State does have enormous discretion if Rowan’s passport was not in fact revoked.
The Maehr court’s treatment of “ne exeat republica” is very weak. The concluding sentence — “Passport revocation under the FAST Act, in contrast, is a purely statutory and legal scheme with built-in due process protections.” — is just incorrect given the complete discretion of the State Dep’t.
The court’s decision that the right to international travel is not a fundamental right, restrictions on which are subject to strict scrutiny (not just intermediate scrutiny), is just plain wrong. Could the government condition a passport on repayment of student loans? After all, that has been judged important enough to be largely excluded from bankruptcy discharges. Of course not. Anyone who is familiar with how the Soviet Union held Jews hostages for decades (sometimes on the flimsy ground that to leave they needed to repay the state exorbitant sums for their educations), or who saw people streaming across Berlin when the wall fell, knows this. It is unnecessary to compare legitimate US tax obligations to that cr**, but the distinction regarding the legitimacy of the obligation goes to whether the measure can pass muster on the basis that the obligation is critical and this is the least restrictive method and there are no special considerations militating otherwise, but in evaluating that question, the right to travel internationally was then, and is now, a fundamental right.
The fact that failure to pay certain other obligations can get a person’s passport revoked is just as bad. I think the 9th Cir. precedent is from 2002, and there was a dissent to the effect that strict scrutiny should have been applied. These provisions all will fall together when they reach the Supreme Court and are held to strict scrutiny. The government cannot imprison a person for failure to pay child support or taxes,; the government cannot deny that person the right to petition the government for redress of grievances; and the government cannot deny the right to come and go freely.
Procedurally, trying to tie all this to State and claiming that what Treasury does under IRC section 7345 is irrelevant is a sleight of hand. Both actions are in the “but for” chain of causation of passport denial, and the 7345 notice has predictable and intended consequences. If as a constitutional matter, the standard of section 7345 is insufficient, then the entire scheme is before the court in a challenge of section 7345. Consider the alternative: a plaintiff sues State and they defend with, “Don’t look at us; once Treasury has sent over the 7345 certification, we are suppose to revoke the passport.”
Maehr’s $250,000 tax debt includes more than $70,000 from 2003 and 2004, before penalties and interest, because he claimed IRS lacked jurisdiction to assess a deficiency to a citizen of the Republic of Colorado. He resided in Pagosa Springs but asked for a Tax Court trial in Albuquerque, so presumably knew that the privileges and immunities clause allowed him to travel across state lines. Judge Carluzzo dismissed the case (Docket No. 10758-11) in an August 2011 order:
“The 41 page petition in this case, filed May 9, 2011, does not conform to Rule 34, and the statements, assertions and allegations made in the petition do not give rise to any justiciable issue with respect to any adjustment or determination made in either of the two notices of deficiency to which the petition relates. Petitioner’s 98-page response to respondent’s motion does nothing to cure the defective petition.
“Relying upon Haines v. Kerner, 404 U.S. 519 (1972), petitioner correctly points out that because the petition was prepared by a self-represented litigant, the petition is entitled to liberal construction. Our obligation to liberally construe the petition, however, does not require that we rewrite it for him. Snow v. Direct TV, Inc. 450 F.3d 1314 (11th Cir. 2006) .”
Would be interesting to see an argument made regarding the dollar threshold for passport revocation. That the current threshold is too low to pass muster, but a higher threshold might be acceptable.
If travel is a fundamental right, the amount will not matter.
I represented the Petitioner in Rowen v. Comm’r. It was a disappointing outcome. The Court sidestepped the issue on a technicality: that the IRS’ part in the passport revocation process is not actionable because the IRS itself does not revoke passports. In reality, that result is achieved by government agencies working in concert. State cannot revoke a taxpayer’s passport without the IRS first certifying the debt as seriously delinquent. This issue will eventually make its way to the 9th circuit where there is a fair possibility of a reversal.
The Ninth Circuit may not reverse. They may reach the merits because the bifurcation of the process between the IRS and State should not preclude jurisdiction, but you have to hope that they go en banc and overrule their 2002 Eunique v. Powell decision in which they upheld passport denial for failure to pay child support. This is an issue of national importance (and a taxpayer can choose the forum by moving to another state), so ultimately the Supreme Court has to weigh in.