Tenth Circuit Rejects Constitutional Challenge to Passport Revocation for Tax Debts

(Parker Tax Publishing August 2021)

The Tenth Circuit affirmed a district court's holding that the certification by the IRS under Code Sec. 7345 of an individual's unpaid taxes as seriously delinquent tax debt, followed by the Department of State's revocation of the individual's passport, did not violate the individual's Constitutional rights. The court concluded that the right to international travel is not a fundamental right and, therefore, the denial or revocation of a passport for a seriously delinquent tax debt is constitutional. Maehr v. U.S. Dept. of State, 2021 PTC 231 (10th Cir. 2021).

Background

Jeffrey Maehr failed to pay income taxes for years 2003 through 2006. In 2018, the IRS certified Maehr's unpaid taxes as seriously delinquent tax debt under Code Sec. 7345 and the State Department subsequently revoked his passport. Under Code Sec. 7345, if a taxpayer is subject to a delinquent federal tax debt of $50,000 or more, the IRS may certify the delinquency to the Secretary of the Treasury, who in turn transmits the certification to the Secretary of State. The Secretary of State is thereafter prohibited from issuing a new passport to the taxpayer and is authorized, though not required, to revoke a previously issued passport. Code Sec. 7345(c) provides that these consequences remain with the taxpayer until any of several circumstances occur, such as full satisfaction of the tax debt, entry into an installment agreement with the IRS, or a finding that the original certification was erroneous.

Maehr filed a complaint in a district court challenging the authority of the Department of State to revoke passports on the basis of unpaid tax debts. The district court granted a State Department's motion to dismiss for failure to state a claim after finding that passport revocation under Code Sec. 7345 is supported by a rational basis and is not otherwise unconstitutional.

Maehr appealed to the Tenth Circuit. He argued that the right to international travel is encompassed in the Privileges and Immunities Clause of Article IV, Section 2, and the Privileges or Immunities Clause of the Fourteenth Amendment. Maehr admitted that these clauses apply only to the state law restrictions on interstate travel, not to the federal government, but he argued that the clauses should be considered "reverse incorporated" against the federal government, based on Supreme Court cases holding that the federal government's duty to avoid racial segregation cannot be any less stringent than that of the states. Maehr further argued that when the government issues a writ of ne exeat republica under Code Sec. 7402 (essentially a writ restraining a person from leaving a jurisdiction), it bears the burden of proving that the order is a necessary, and not merely and convenient, method of enforcement, and that a similar standard should apply to Code Sec. 7345. In addition, Maehr contended that the revocation of his passport based on his tax delinquency amounted to an infringement of his right to international travel in violation of substantive due process. According to Maehr, the right to international travel is a fundamental right that cannot be infringed absent a compelling government interest.

Analysis

The Tenth Circuit rejected Maehr's arguments and affirmed the judgment of the district court. Regarding Maehr's reverse incorporation argument, the court found that the cases cited by Maehr addressed only racial segregation and were not written so broadly as to encompass all constitutional civil rights protections. The court also found that even if the Privileges and Immunities clauses applied to the federal government, they would be of no import in this case because the right to international travel is not a privilege or immunity encompassed by the clauses. The right to travel, the court noted, has always been interpreted to mean interstate travel, never international travel.

Next, the court rejected Maehr's ne exeat republica argument after finding that ne exeat writs differ significantly from certifications under Code Sec. 7345 and that the ne exeat caselaw was therefore inapplicable. First, the court said that 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, according to the court, even if the underlying tax debt is contested by the taxpayer, whereas the Code Sec. 7345(c) requires that the taxpayer's rights to challenge a contested liability have lapsed or been exhausted prior to passport revocation. Third, the court noted that 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. The court found that passport revocation, in contrast, is a purely statutory and legal scheme with built-in due process protections.

On the substantive due process issue, the court held that the right of international travel is not fundamental and that Code Sec. 7345 passed rational basis review. In the court's view, although the Supreme Court had hinted in several cases that the right of international travel was comparable to the right of interstate travel, the Supreme Court has since 1978 been more restrained about constitutional protection for international travel. For example, in Haig v. Agee, 453 U.S. 280 (1981), the Court reiterated the distinction between the fundamental right of interstate travel and a lesser right to travel internationally and said that the freedom of travel outside the United States had to be distinguished from the right to travel within the United States. Thus, because Maehr did not establish a fundamental right of international travel, the court said it had to decide whether the government's actions taken under Code Sec. 7345 were constitutional under the less exacting standard of rational basis review. The court found that Code Sec. 7345 passed rational basis review because the government has a legitimate interest in raising money through taxes and Congress's decision to further this interest by providing for the revocation of passports for those with a seriously delinquent tax debt is rational. In the court's view, Congress could rationally conclude that seriously delinquent taxpayers should be restricted from leaving the country to prevent the secretion of assets overseas or to increase compliance.

Observation: In a concurring opinion, one judge reasoned that an intermediate level of scrutiny should apply to government restrictions on international travel. The judge said that the freedom to leave one's country is a deep and fundamental component of human liberty. However, the judge noted that neither Maehr nor the government argued that an intermediate level of scrutiny should apply and therefore, the judgment of the district court should be left undisturbed.

For a discussion of IRS collection procedures, see Parker Tax ¶260,501.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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