Is the FAST Act’s Passport Certification Constitutional?

Can the government restrict your ability to travel overseas if you don’t pay your taxes? Is the 2015 FAST Act’s passport certification process constitutional? One doctor challenged the law, but he may have filed his lawsuit a bit too soon.

20 Years of Unpaid Taxes Results in Certification of Seriously Delinquent Tax Debt

Robert Rowen had a long history of tax avoidance dating back to 1994. By April 2017, he had already pleaded guilty to corruptly endeavoring to impede an IRS investigation. As part of his plea agreement, he filed delinquent tax returns for 1994 and 1996 in 1998. However, he never paid the taxes he owed on those delinquent tax returns. The IRS assessed a deficiency in 2000, and a tax lien in 2001.

Rather than contesting the 2001 tax lien through the IRS Office of Appeals, Rowen filed for bankruptcy, hoping to discharge his past due debts. However, in 2003, the bankruptcy court held that Rowen had willfully failed to pay his tax returns in the 90s and refused to discharge the debts. In response, Rowen refused to pay them.

He stopped filing income tax returns again starting with tax year 2003. In 2009, the IRS generated a substitute return for the missing 2007 documents, triggering Rowen to file tax returns for 2003 through 2007. He filed the forms, but he didn’t pay the taxes. The IRS issued another notice of Federal tax lien. This time Rowen appealed, but the IRS Appeals Office sustained the levies.

So Rowen went to court. He asked the Tax Court to review the notice of determination in 2012. Two years later, he stipulated to the IRS Appeals’ determination in full. He still didn’t pay any of the assessed income tax liabilities.

Then, in 2015, the IRS got a new tool to enforce unpaid taxes: the certification of seriously delinquent tax debt for passport consequences. On July 16, 2018, the IRS Commissioner certified Rowen as an individual owing a seriously delinquent tax tax debt. By the time the certification was made, Rowen owed $474,847 in unpaid tax liabilities. Rowen was notified and the certification was sent first to the Secretary of Treasury, and then the Secretary of State.

Doctor Without Borders Claims Passport Certification is Unconstitutional

As a doctor licensed to practice in California, Dr. Rowen said the certification of his tax debt as “seriously delinquent” was an unconstitutional infringement on his rights, and a violation of his human rights under the Universal Declaration of Human Rights (UDHR). Dr. Rowen was a volunteer doctor who frequently traveled to other countries to offer medical services to underprivileged populations. He also had family in Singapore and China, whom he visited frequently. All of this made Dr. Rowen’s passport -- and the freedom to travel it represents -- highly valuable to him. His right to international travel was fundamental, he said, and certification unconstitutionally and illegally interfered with that right.

FAST Act Creates a Relay for Government Agencies

Tax Court Judge Emin Toro took up the issue in response to opposing motions for summary disposition. The Judge’s summary of the relevant sections of the Fixing America’s Surface Transportation Act (FAST Act) outlined something of a relay, with different government agencies passing the baton toward passport revocation or passport application rejection.

Step 1: IRS Certifies Seriously Delinquent Tax Debt

For the IRS to certify an individual as having “seriously delinquent tax debt” it must determine that the person has “an unpaid, legally enforceable Federal tax liability” of more than $51,000. However, the IRS must also show that it has followed the appropriate steps to collect on that debt by:

  • Issuing a notice of lien
  • Allowing the taxpayer to exhaust their administrative rights or allowing them to lapse
  • Issuing a levy

In addition, the FAST Act excludes debts that are:

  • Being paid in a timely manner according to an installment agreement or offer in compromise
  • Suspended as uncollectible
  • Awaiting a due process hearing
  • Foregone according to a discretionary exemption by the IRS

When the IRS makes this determination, it must both (1) issue a certification of seriously delinquent tax debt to the Secretary of Treasury, and (2) notify the taxpayer of the certification.

Step 2: Secretary of Treasury Performs the Handoff

The Treasury Department’s role in the FAST Act’s transport sanctions is small. Once the IRS issues the certification, the Secretary of Treasury is charged with sending that certification to the Secretary of State. A taxpayer may challenge the certification in court even before this handoff occurs.

Step 3: Secretary of State Rejects Passport Application or Revokes Passport

Once the Secretary of Treasury transmits the certification to the Secretary of State, two things happen:

  1. The Secretary of State must not issue a new passport or renew an expiring passport except “in emergency circumstances or for humanitarian reasons.”
  2. The Secretary of State may, in his discretion, revoke a passport that has already been issued.

Dr. Rowen may have jumped the gun in filing his constitution-based lawsuit upon receiving notice of certification from the IRS. His attorney claimed that the “the [IRS] Commissioner has exercised his power to revoke Dr. Rowen’s passport, prohibiting him from leaving the country -- regardless of the reasons for his travels.” However, the Judge pointed out that the IRS’s actions in issuing the certification did not affect Rowen’s travel privileges at all. The FAST Act “expressly leaves all passport-related decisions for ‘action’ by the Secretary of State.”

“In short, only the Secretary of State, not the Commissioner, may revoke or deny a passport…”

Therefore, the IRS could not have unconstitutionally restricted Dr. Rowen’s ability to travel, or violated his human rights under the UDHR.

Rowen v Commissioner of Internal Revenue Leaves Open the Constitutional Question for Passport Revocation After Certification by IRS

The Court here repeatedly noted that as of August 2020, Dr. Rowen’s passport and ability to travel internationally had not been revoked. His passport was valid when the certification was issued, and would not need to be renewed until November 2024. Dr. Rowen challenged the IRS’s certification, rather than the Secretary of State’s revocation of his passport. That means that there could be another lawsuit in the future to address whether a decision by the Secretary of State to revoke a passport based on the IRS’s certification of a “seriously delinquent tax debt” is an unconstitutional infringement on the right to travel or a violation of a traveler’s “right to freedom of movement” or right to leave and return to his home country under the UDHR. If Dr. Rowen continues his pattern of non-payment, he might even be the one to file it.

Attorney Joseph R. Viola is a tax attorney in Philadelphia, Pennsylvania with over 30 years experience. If you have questions regarding seriously delinquent tax debt or Notices of Certification for the revocation or denial of passports due to tax debt, contact Joe Viola to schedule a consultation.

Categories: Tax / IRS Penalties