The government may start stripping passports from delinquent taxpayers. Can that really be done?
The Surface Transportation Reauthorization and Reform Act is likely about to become law. It has passed both the House and the Senate, and, while the conference committee could make changes, it's expected to pass on to President Obama largely intact. Buried in this massive bill is Section 32101, “Revocation or Denial of Passport in Case of Certain Unpaid Taxes,” which would grant the State Department authority to deny, revoke or limit the passports of any taxpayer certified by the IRS to owe more than $50,000 in seriously delinquent taxes.
Assuming the bill passes without veto, this will go into effect January 1, 2016.
What are seriously delinquent taxes? For the purposes of this law, it’s any tax bill with a lien out that isn’t currently subject to a payment agreement or pending hearing.
Now, the link between tax collection and travel has existed for years as a financial and law enforcement matter. The feds can arrest criminal tax evaders whenever they enter or pass through the country (a potential shock for many U.S. expats who don’t realize they owe taxes even when overseas). Under the relatively new FATCA the IRS also works with banks around the world to collect money from people who, having seen far too many movies, try to park large, discreet accounts in cooperating foreign institutions. (The Swiss get an undeservedly bad rap for this.)
Yet using the passport itself as leverage for taxes is an idea that only goes back to 2011, when the Government Accountability Office suggested as much in a report to Congress.
And Congress hasn’t tried to pretend that this is anything other than a revenue-generating mechanism. As the GAO pointed out, there’s enormous money to be made here. In 2008 alone the 16 million passport holders nationwide owed over $5.8 billion in back taxes. That number has certainly only gone up, as one of the biggest victims of Congressional cuts to the IRS’s budget has been major tax enforcement.
The accountants might want to slow their roll though, because it’s pretty unlikely that shaking some money loose is a legitimate reason to restrict a citizen’s freedom of movement.
Advocates of the revocation plan argue that it’s the same as discontinuing any other municipal service in the face of delinquency. Failure to pay civic debts, such as taxes, fines or fees, can lead the government to refuse professional licensure or a driver’s licenses, the theory goes. Passports in effect will simply join the list of services that the government no longer provides to those who owe it too much money.
Yet while there’s no vested right to drive a Camry or arrange flowers professionally, the Constitution does protect freedom of movement overseas. It falls under the liberty prong of the Fifth Amendment’s Due Process Clause, and ever since the landmark case Kent v. Dulles, the Supreme Court has been overwhelmingly consistent on this point: the State Department can’t deny someone travel documents without proving a relationship between the travel restriction and a legitimate government interest.
(This is as opposed to travel within the United States, which is a fundamental and closely protected right.)
So score one for the globetrotters out there with big tax bills.
The trouble is, the Supreme Court hasn't specified what constitutes sufficient due process when it comes to leaving the country. Without a standard to use when evaluating these claims, lawyers are left just confused as to just how tightly the justices are willing to protect a citizen’s freedom to travel against government oversight.
More challengingly, the Supreme Court has never talked about this as a financial issue. Although the highest court in the land has heard many challenges to passport restrictions since 1958’s Kent, virtually all have dealt with political issues (including Kent itself, which held in favor of two alleged communist sympathizers). This body of law developed first during the Red Scare and, more recently, the War on Terror.
More relevant is 1998’s Passport Denial Program, under which the State Department restricts the passports of anyone who falls more than $2,500 behind on child support. According to Health and Human Services estimates, this program has collected more than $200 million since its inception. Although never before the Supreme Court, the notoriously liberal Ninth Circuit upheld it in 2002’s Eunique v. Powell.
That may be the end of it. The Supreme Court has been clear that “the ‘right’ of international travel has been considered to be no more than an aspect of the ‘liberty’ protected by the Due Process Clause of the Fifth Amendment,” (see: Califano v. Torres), and collecting back payments of any kind may be a sufficiently legitimate government interest to justify the burden on movement.
On the other hand, courts consider two issues when judging a due process claim: how relevant is the restriction to the government purpose, and how important is that purpose. This isn’t a law targeted at criminals or delinquent taxpayers with a reasonable likelihood of fleeing the country, only those with outstanding bills they haven’t yet paid, and given how quickly interest and fees can inflate a tax bill, $50,000 isn’t all that high a number.
Just as importantly, collecting child support is arguably a far more important government interest. The IRS can take its time about collecting back taxes and has a wide variety of tools available, many of which this law does not require it to exhaust. Child support, on the other hand, can be an issue of food, clothing and shelter for many families with delinquent parents who shirk their responsibility.
The government is allowed more sweeping measures to address more urgent problems. It’s a lot more important to make sure a family gets food on the table than worrying about whether the IRS has to send another letter, quite possibly enough so to justify harsher measures.
And the losing deadbeat in Eunique did have a point: without evidence of intent to flee, there’s very little relationship between restricting travel and collecting money. It’s just an effective means of coercion, and that’s not always good enough. Just because a government agency wants something from a citizen, even legitimately, doesn’t give it carte blanche to make that person’s life hell.
Without more, this is generalized harassment. This law is a purely coercive measure, designed simply to make life unpleasant until a taxpayer ponies up. Yet the Court has made very clear that the due process involved in restricting passports is “a function not only of the extent of the governmental restriction imposed, but also of the extent of the necessity for the restriction.”
A law restricting travel cannot be overly broad, and it can’t target people indiscriminately, it has to have a specific, identifiable relationship between ends and means. In the case of child support, that relationship (accurately or not) is the propensity for deadbeat parents to flee and the overriding urgency of getting that money into the hands that need it.
Expanding that theory to taxes would require a breathtakingly expansive view of government power, one which allows virtually any coercive action justified on the basis of revenue. This law isn’t targeted at criminals, or even anyone identified as an elevated risk of flight or non-payment. This is about performing a very routine, non-emergency function of government. If that gives rise to a general power of coercion, what wouldn’t?
Collecting taxes in the aggregate is critical, but on the individual scale the IRS has plenty of other tools available. It should use those first.
When it comes to a Constitutionally protected liberty, “we want the money and this would probably work” just shouldn’t cut it.