The Tax Court held that Sec. 7345, which allows the IRS to certify that a taxpayer has a "seriously delinquent tax debt," which in turn allows the Secretary of State to deny or revoke the taxpayer's passport, does not violate the Fifth Amendment to the Constitution.
Background
Robert Rowen is a medical doctor licensed in California. Rowen is a U.S. citizen who frequently travels to developing countries providing free medical care to people there who would not otherwise have access to needed medical care. In addition, he has family members in Singapore and mainland China whom he visits in those countries.
Outside of his charitable medical endeavors, Rowen earns income, but for more than two decades, he failed to pay his federal tax as required by law.
The IRS objected to Rowen's not paying the tax he owed and assessed tax liabilities totaling $474,846 relating to tax years 1994, 1996, 1997, and 2003 through 2007 against Rowen and attempted to collect the outstanding amounts through its usual means — sending demands, filing liens, attempting to levy on assets — but had little success.
However, in 2015, Congress, in Section 32101 of the Fixing America's Surface Transportation (FAST) Act, P.L. 114-94, provided the IRS with a new tool to put pressure on recalcitrant taxpayers. Section 32101 of the FAST Act created Sec. 7345, under which the IRS is authorized to certify that an individual has a "seriously delinquent tax debt" and send the certification of the debt to Treasury. Treasury is then required to send the certification to the Secretary of State. Section 32101 then (but not as part of Sec. 7345) directs the Secretary of State to take "action with respect to denial, revocation, or limitation" of the individual's passport. While the Secretary of State must generally take one of these three actions, it has discretion to issue a new passport or renew an expiring one "in emergency circumstances or for humanitarian reasons." Thus, while the IRS's certification of a taxpayer's "seriously delinquent tax debt" is the beginning of a process that can lead to a taxpayer's losing his or her passport privileges, the IRS does not have the power to revoke or deny a passport under Sec. 7345.
Applying Sec. 7345, the IRS certified that Rowen has a seriously delinquent tax debt and sent the certification to Treasury, which passed it along to the Secretary of State. As of the time the case was decided, though, the Secretary of State had not taken any action regarding Rowen's passport.
After receiving notice of the certification from the IRS, Rowen challenged the IRS's action in Tax Court, where he filed a motion for summary judgment, asking the court to find that the certification was erroneous based on two arguments. First, he maintained that Sec. 7345 is unconstitutional because it prohibits international travel in violation of the Due Process Clause of the Fifth Amendment to the Constitution. Second, he argued that Sec. 7345 violates his human rights under the United Nations' Universal Declaration of Human Rights (UDHR), G.A. Res. 217A (III), U.N. Doc. A/810 (Dec. 10, 1948). The IRS cross-motioned for summary judgment.
The Tax Court's decision
The Tax Court upheld the IRS's certification of Rowen's seriously delinquent tax debt. The court found that because, under Sec. 7345, the IRS is not empowered to revoke or deny a passport to a taxpayer, Rowen's arguments that the law was unconstitutional or violated the UDHR because it prohibited international travel did not apply to Sec. 7345.
Fifth Amendment: Rowen argued that Sec. 7345 is unconstitutional on its face because it prohibits international travel, which he claimed is a fundamental right granted by the Fifth Amendment to the Constitution.
The court rejected this idea, finding that the "plain test" of Sec. 7345 does not impose a prohibition on international travel. Instead, Sec. 7345 merely gives the IRS the power to certify the existence of a seriously delinquent tax debt based on the presence of certain tax-related facts and requires it to send the certification to Treasury and inform the taxpayer that the certification has been made. The power to revoke or deny a passport to a taxpayer is given by another provision, Section 32101(e) of the FAST Act, to the Secretary of State. Consequently, only the Secretary of State can revoke or deny a passport, and its authority to do so does not come from Sec. 7345.
The Tax Court noted that Rowen had gone to great lengths in trying to show that travel is a fundamental right and the infringement of it is therefore subject to strict scrutiny. Regardless of the nature of the right to travel internationally (fundamental or not) and regardless of the standard of review under the Constitution (strict scrutiny, intermediate scrutiny, or rational basis), the court found that Sec. 7345, which merely provides for the certification of certain tax-related facts and does not restrict in any manner the right to international travel, does not violate the Due Process Clause of the Fifth Amendment. Furthermore, because the constitutionality of the authority granted to the secretary of State by FAST Act Section 32101(e) was not before it, the court expressed no view on that issue.
UDHR: Rowen observed that, under Article 13 of the UDHR, "(1) [e]veryone has the right to freedom of movement and residence within the borders of each state" and "(2) [e]veryone has the right to leave any country, including his own, and to return to his country." He also argued that in Sosa v. Alvarez-Machain, 542 U.S. 692, 734-35 (2004), the Supreme Court held that the UDHR binds the United States as a matter of international law. The Tax Court found that this latter statement was simply wrong because in Sosa, the Supreme Court was not referring to the UDHR but to the International Covenant on Civil and Political Rights. Regardless, the Tax Court found that it did not need to address the UDHR argument for the same reason as it did not need to address the Fifth Amendment argument, because Sec. 7345 does not impose any limits on the right to travel.
Reflections
A concurring opinion noted that the majority had treated Rowen's challenge as a challenge only to Sec. 7345, rather than the entire scheme set out in Section 32101 of the FAST Act. The concurring judge found that based on the facts and Rowen's pleadings, it had rightfully limited its consideration to Sec. 7345 and had properly decided the case. However, the concurring judge wrote to emphasize his belief that the majority's opinion did not foreclose a constitutional challenge in the Tax Court, "in a future case with appropriate facts and squarely presented arguments," to the entire tax collection mechanism created by the FAST Act, under the jurisdiction granted to the Tax Court in Sec. 7345(e)(1).
Rowen, 156 T.C. No. 8 (2021)
