On March 30, 2021, the United States Tax Court granted summary judgment to the Internal Revenue Service with respect to a taxpayer debtor/physician’s constitutional challenge to the IRS’ certification of the delinquent tax debt under IRC, § 7345. The taxpayer’s outstanding tax balance was close to $500,000 and so the IRS turned to a new tool in its collection toolbox – § 7345.1. Under this section, the IRS certified that Robert Rowen, the taxpayer, had a seriously delinquent tax debt to the Treasury secretary, who then transmitted the certification to the State Department. The IRS notified Rowen of the certification. At the time of the suit and the Tax Court’s opinion, the State Department had not taken any action concerning Rowen’s passport. Nevertheless, Rowen petitioned the Tax Court, challenging the IRS’s certification as unconstitutional and a violation of the Universal Declaration of Human Rights (UDHR).
The court held that the certification does not deny his right to travel or his rights under the UDHR.
Judge Emin Toro authored the court’s opinion and observed that this is the first time the court has considered the merits of certification under 26 U.S. § 7345. Judge Toro observed that §7345 was enacted as part of the Fixing America’s Surface Transportation Act (FAST Act). The opinion explains that the IRS certifies the delinquent tax debt and sends it to the Treasury secretary, who must then transmit the certification to the State Department. The State Department can revoke, deny, or limit a tax delinquent individual’s passport.
The opinion rejected Rowen’s argument that § 7345 violates his due process rights under the Fifth Amendment since it forbids international travel. Rowen claimed such travel is a fundamental right. The opinion ruled that claim was meritless since the plain text of the statute does not prohibit international travel. The opinion observed that § 7345 only certifies that an individual has a serious tax delinquency. Thereafter, the State Department makes any passport-related decisions. The opinion also rejected Rowen’s claim that §7345 violates his right to travel under the UDHR, since the statute does not impose a limit on the right to travel.
According to the opinion, Rowen’s procedural due process and statute of limitations claims do not have merit because he did not make such arguments in his summary judgment motion. In addition, Rowen to not introduce evidence establishing that the period of limitations has elapsed. The opinion found that the IRS’s certification was not erroneous and that the IRS met the requirements for certification under § 7345. Hence, the IRS was entitled to summary judgment.
Judge Paige Marvel wrote a concurring opinion, stating that the court’s opinion does not foreclose a constitutional challenge in a future case with appropriate facts and squarely presented arguments to the entire tax collection mechanism created by FAST.
Clearly the taxpayer’s petition and request for summary judgment were flawed in their efforts to challenge one of the new mechanisms to collect taxes.
The current issue of the IELR will discuss the implications of the case in more detail.