Does an IRS Passport Revocation Violate Taxpayers’ Right to Travel?

IRS form 1040 with individual income tax return of dollar bills

When a taxpayer falls seriously behind in paying tax obligations, they may fall subject to IRS passport revocation procedures used to collect the outstanding tax liabilities. But does the IRS blocking a taxpayer’s ability to get or renew a passport interfere with their constitutional right to travel? A recent Tax Court case took up the issue, along with the ability for tax courts to review the tax debts themselves in an IRS passport revocation case.

Taxpayer Sues Over IRS Passport Revocation

In Adams v IRS, the taxpayer asked the Tax Court to reverse the IRS’s certification that he had a seriously delinquent tax debt. Mr. Adams had more than $1.2 million in unpaid tax liabilities (including unpaid taxes, penalties, and interest) accumulated over 8 years. The IRS had issued the certification based on substitute tax returns, tax assessments, and collections efforts related to tax years 2007 through 2015. The IRS had tried to collect those debts with little success.

As part of its collection efforts, the IRS issued several Notices of Federal Tax Lien (NFTLs) in 2015, 2016, and 2019. When those failed, in March 2020, the IRS certified Mr. Adams as having “seriously delinquent tax debt,” totaling over $1.2 million. It sent that certification to the Secretary of State for passport revocation. In January 2021, more than a year after the most recent tax lien, Mr. Adams sued to have his passport reinstated, and to get relief from the tax debt owed.

At the time, Mr. Adams’ passport was still active. It was issued in 2017 and would not expire until 2027. However, in October 2022, while the case was pending, Mr. Adams sought a new passport and the Department of State sent him a letter denying that application due to the IRS passport revocation certification.

Can a Passport Revocation Lawsuit Reverse Tax Assessments?

The law allowing IRS passport revocations is the Fixing America’s Surface Transportation Act (FAST Act) passed in 2015. It gives the IRS another tool to collect unpaid tax liabilities by certifying that a taxpayer has “seriously delinquent tax debt” meaning:

[A]n unpaid, legally enforceable Federal tax liability of an individual–

  1. which has been assessed,
  2. which is greater than $50,000, and
  3. with respect to which–

(i) a notice of lien has been filed … and the administrative rights … with respect to such filing have been exhausted or have lapsed, or

(ii) a levy is made…

When a taxpayer files a lawsuit challenging the IRS’s certification of seriously delinquent tax debt, it is the certification they are challenging, not the tax debts themselves. In a passport revocation case, if the Tax Court agrees with the taxpayer that there was no basis for certification, it “may order the Secretary [of the Treasury] to notify the Secretary of State that such certification was erroneous.” In other words, it can require the IRS to tell the Secretary of State to remove the block to the taxpayer renewing or applying for a new passport.

The court cannot eliminate the underlying tax debt, though. There are separate proceedings, with their own deadlines, to challenge incorrect tax assessments and liabilities. In Mr. Adams’ case, he would have needed to request collection due process hearings when the tax liens were issued, rather than waiting until the IRS passport revocation proceedings were issued years later. The passport revocation law allows certification where seriously delinquent tax debt “has been assessed.” Whether that tax debt was properly assessed is a different issue. The Tax Court said in a passport revocation case it did not have authority to correct the IRS’s tax assessments or redetermine the amount of tax the taxpayer actually owed. Only the validity of the certification is up for consideration.

In Mr. Adams’ case, the IRS had assessed more than $1.2 million in federal tax liabilities, penalties, and interest, which remained legally enforceable. The IRS had also properly filed NFTLs, which Mr. Adams did not challenge. Therefore, the Tax Court found that the certification was not erroneous and should be allowed to stand.

Does an IRS Passport Revocation Violate Taxpayers’ Right to Travel?

The Tax Court then turned to the constitutional question of whether an IRS certification of seriously delinquent tax debt violated the taxpayer’s right to travel. The Court determined that the certification itself did nothing to interfere with the taxpayer’s right to travel. The Court said that the FAST Act involved three government actors:

  • Commissioner of the IRS (who certifies the seriously delinquent tax debt)
  • Secretary of the Treasury (who sends the certification to the Secretary of State)
  • Secretary of State (who receives the certification and can deny, revoke, or limit a passport)

However, the section of the FAST Act allowing a taxpayer to file an IRS passport revocation lawsuit refers only to the Commissioner, and not to the Secretary of State. Thus, the Tax Court had no jurisdiction over what the State Department did with that certification, and could not review the constitutionality of a passport revocation issued as a result of a certification of seriously delinquent tax debt.

If this all sounds familiar, it is because another tax court case raised the same issues in 2021. Rowen v Commissioner of Internal Revenue asked whether the IRS passport revocation was constitutional. But Mr. Rowen’s passport application had not been denied the way Mr. Adams’ had. Mr. Rowen was suing preemptively to prevent his passport from being revoked. Still, the outcome was the same. Just like here, that court said that the constitutional question lay with the Secretary of State, not the IRS.

The importance of cases like Rowen and Adams is to remind taxpayers (and the tax preparers who help them) that the time to challenge tax assessments is when they are issued. Do not wait until you have a seriously delinquent tax debt to start correcting the problem. Otherwise, you could find yourself unable to renew your passport and travel freely outside the country.

Attorney Joseph R. Viola is a tax attorney in Philadelphia, Pennsylvania with over 35 years experience. If you have questions regarding seriously delinquent tax debt or IRS passport revocation actions, contact Joe Viola to schedule a consultation.

Categories: Tax / IRS Penalties