by: Anthony Parent 2018-07-20
Wit the news out that the IRS has identified over 300,000 Americans whose US passports are at risk for revocation or denial, we thought it would be a great time to discuss the constitutionality of the law that allows the IRS to direct the State Department to take away the right of a US person to travel overseas.
As part of the Fixing America’s Surface Transportation (FAST) Act of 2015, Congress enacted Section 7345 of the Internal Revenue Code. The law now requires the IRS to notify the State Department about “seriously delinquent” taxpayers. “Seriously delinquent” taxpayers are individuals with unpaid, legally enforceable tax debt that exceeds $50,000. The State Department is prohibited to issue or a renew a passport for an individual with a “seriously delinquent” tax debt. Further, if an individual with a “seriously delinquent” tax debt currently has a valid passport, the State Department may revoke his passport or limit his ability to travel outside of the United States.
With taxpayers now potentially at risk of having their passports revoked, it is timely to delve in to the legal issues involved in this legislation.
A United States passport is property of the United States Government. It does not belong to the holder. Upon demand the passport must be returned to the government. 22 C.F.R. §§ 51.7, 51.66 (2009). There is no legal right to possess a passport. There is no Fifth Amendment privilege to refuse to surrender a passport. United States v. Praetorius, 622 F.2d 1054, 1057 (2d Cir. 1979).
However, the right to freely travel abroad is treated by our Supreme Court as a fundamental constitutional right. See Aptheker v. Secretary of State, 378 U.S. 500, 517 (1964) (finding that “freedom of travel is a constitutional liberty closely related to rights of free speech and association”). Justice William Douglas in Kent v. Dulles wrote:
… The right to travel is a part of the “liberty” of which the citizen cannot be deprived without due process of law under the Fifth Amendment. … Freedom of movement across frontiers in either direction, and inside frontiers as well, was a part of our heritage. Travel abroad, like travel within the country, may be necessary for a livelihood. It may be as close to the heart of the individual as the choice of what he eats, or wears, or reads. Freedom of movement is basic in our scheme of values. …
Kent v. Dulles, 357 U.S. 116, 125 (1958).
Section 7345 imposes a very significant and concerning change in U.S. tax collection enforcement measures, because it sidesteps two centuries of established law and constitutional procedure governing this exact area. During the last 200 years of U.S. legal history, the doctrine of ne exeat republica has been (and to this day continues to be) a method by which claimants including the federal government could prevent a debtor from leaving the United States, by obtaining what is called a writ of ne exeat republica. See, McKenzie et al v. Cowing, 4 Cranch CC 479 (1834). (Ne exeat republica may be loosely translated to “he shall not depart the country.) Section 7402 of the Internal Revenue Code provides that federal district courts may issue such writs in tax cases. However, a debtor was required to be given sufficient due process in a federal district court before such a writ could be granted. See, Kent v. Dulles, 357 U.S. 116, 126 (1958).
With section 7345, Congress has side stepped that constitutional right. Without having to prove to a federal district court that a taxpayer plans to quickly depart the United States, that the taxpayer owes a specific amount that the debtor could pay, and that the taxpayer has sufficient foreign assets but insufficient domestic assets to pay the claim, Section 7345 gives the IRS the power to certify a taxpayer to the State Department and bar a taxpayer’s foreign travel only for the reason that the taxpayer’s total tax, penalty and interest exceeds $50,000, so long as a federal tax lien or levy had previously been issued. Further, when calculating that amount, the IRS does not count any portion of tax that may have already been paid under an installment agreement, an offer of compromise, a settlement agreement with the Department of Justice, a pendency of a Section 6330 collections due process hearing, or where an application for innocent spouse relief had been requested as to those taxes.
Further troubling is that the scope of the judicial review provided under Section 7345(e) stays within Section 7345, and never considers the burden requirements long required for this exact same taking under Section 7402.
The IRS may argue that a taxpayer still has an equivalent amount of procedure. But, this isn’t true. The IRS no longer has to stand before a federal district court judge and make its case. That taking of a taxpayer’s fundamental right to travel under Section 7345 is constitutionally suspect because it does not require the balancing required under its parallel Section 7402, prior to the government’s taking of that right.
The IRS may argue that the taxpayer can simply pay the amount that is due. However, this is not an easy prospect for people with balances exceeding $50,000, because those with such balances cannot enter into an online installment agreement. Instead, those individuals are required to file on paper. It’s not uncommon for installment agreement or offers in compromise to linger with the IRS for months or even years.
Also, the triggering balance amount of >$50,000 is too low. That low dollar amount will pull in large amounts of otherwise low paying taxpayers. This dollar amount is too low to justify impeding on an individual’s fundamental right to travel.
The IRS states that once a taxpayer has resolved their tax problem with the IRS, the IRS will reverse the certification within 30 days of resolution of the problem “and provide notification to the State Department as soon as practicable.” There is no mechanism to cause the IRS to timely notify the State Department of a reversal, and to cause the State Department to timely issue a passport or reverse a passport revocation. While a taxpayer may file a judicial action to force the IRS to notify the State Department of an erroneous certification, the State Department is not subject to suit under Section 7345, and the federal district court or Tax Court cannot order the State Department to do anything, or even to award monetary damages in an erroneous certification (or late release of certification) matter.
The IRS uses an antiquated system to maintain taxpayer’s addresses, that in some cases lead to people not knowing that they have existing tax debt. Congress has created law that infringes on what the Supreme Court considers to be a fundamental right to travel. Taxpayers deserve proper notice if they have existing tax debt. However, the antiquated system that the IRS uses to maintain taxpayer’s addresses leads to people not knowing that they have existing tax debt. American citizens deserve timely notice from the IRS if its actions impact a fundamental right. It’s necessary for the IRS to change its record keeping system in order to administrate this fairly.
The issue becomes further complicated when considering the impact of Section 7345 with other laws impacting the right to travel. For example, under The REAL ID Act federal agencies cannot accept driver’s licenses and identification cards issued by states that do not meet certain standards. The federal government will require your driver license or identification (ID) card to be REAL ID compliant if you wish to use it as identification to board a domestic flight. If a person does not have a driver’s license that is REAL ID compliant a United States Passport is the only alternative form of identification that a citizen (without having special status that qualifies them for an alternate forms of identification) can use to air travel. Therefore, Section 7345 not only impact a person’s ability to travel to other countries, but may also impact a person’s ability to travel domestically.
A Constitutional challenge to this provision of the FAST Act could preval. THe issue is that it many years in the future. IF you are looking for a more direct, quicker way to ease your worried mind, click her to learn about our passport protection services.