Page 369 - TaxAdviser_2022

DC CURRENTS

definition (IRM §5.19.25.10(1)). But, (2) his fundamental right to travel; and
In Maehr, in other situations, the debt could be (3) substantive due process.
adjusted to below the threshold, making
The district court rejected all his
the district court it no longer seriously delinquent and arguments, finding that the rules and
rejected all of therefore subject to decertification. For restrictions of Sec. 7345 were rationally
related to a legitimate government
example, if a penalty abatement based
the taxpayer’s on reasonable cause is granted and the interest (Maehr v. United States Dep’t of
arguments, finding debt amount drops below the threshold, State, No. 18-cv-02984-PAB-NRN
that the rules the certification will be reversed (IRM (D. Colo. 2/28/20)). This lower level of
constitutional scrutiny was affirmed by
§5.19.25.10(4)(e)). However, the IRM
and restrictions of cautions that if the debt drops below the Tenth Circuit on each argument,
Sec. 7345 were the threshold based on first-time abate- thus creating a significant appellate
ment relief, the certification will not be
court precedent upholding the
rationally related reversed. Another example of a circum- constitutionality of Sec. 7345.
to a legitimate stance justifying discretionary reversal Charging ahead?
is when a certification is based on a
government substitute-for-return assessment and The IRS may charge ahead with pass-
interest. the taxpayer afterward files a return that port revocation as a collection tool in
shows tax below the threshold. In that 2022. It resumed certifications and no-
case, the certification will be reversed tices to taxpayers under the program in
upon processing of the return (id.). March 2021, after the People First Ini-
A taxpayer who neglects disputed tiative had suspended it a year earlier in
because, at minimum, that will prevent tax debts that in the aggregate exceed response to the COVID-19 pandemic.
the certification or establish grounds for the threshold amount may receive a The IRM guidance clarified aspects of
reversal of certification while the tax- CP508C notice and face possible Sec. 7345 and made clear that “taxpayer
payer is challenging the collection. restrictions on the right to travel under certifications will be provided systemi-
a U.S. passport. Navigating the statute cally to the U.S. Department of State
No administrative or appeals and the additional guidance can be on a weekly basis” (IRM §5.19.25.7(4)).
process challenging, and, in the absence of an The Tenth Circuit upheld the statute’s
No administrative appeals, claim pro- exception or exclusion, the only recourse constitutionality in Maehr, and the Tax
cesses, or administrative hearings can be is to file a civil action (or fully pay, if Court made clear its limited scope of re-
filed with the IRS if a taxpayer believes warranted). Such was the case with a view and remedy in Ruesch. With no ap-
that a certification is erroneous. The sole taxpayer in Maehr v. United States Dep’t peal or administrative options and with
remedy is to bring a civil action in the of State, 5 F.4th 1100 (10th Cir. 2021); a very narrow judicial remedy, affected
Tax Court or a U.S. district court (IRM however, the taxpayer in Maehr taxpayers must understand and, if neces-
§5.19.25.13). This is not taxpayer- challenged the constitutionality of sary, assert the various exceptions and
friendly, and to the extent there is no Sec. 7345. exclusions explained in this column. ■
exception or exclusion, the taxpayer must
file a civil action for decertification relief, Maehr
as explained above. The taxpayer in Maehr was certified to
have a seriously delinquent tax debt of
Reversal of certification approximately $250,000 in taxes and Contributor
The statute obligates the commissioner penalties for tax years 2003–2006.
Evan M. Stone, J.D., LL.M., is a senior
to reverse a certification once a taxpayer After surrendering his passport, he filed
director, Tax Controversy Services,
qualifies for an exception because it a civil action in district court seeking
with RSM US LLP Washington
would then exclude the debt from the reinstatement of his passport, arguing
National Tax in Washington, D.C.
definition of a seriously delinquent tax that Sec. 7345 was unconstitutional
For more information about
debt. A taxpayer may not, however, on the grounds that it violated (1) the
this column, contact
simply pay down the debt to below the Privileges and Immunities clauses of
thetaxadviser@aicpa.org.
qualifying inflation-adjusted thresh- the U.S. Constitution in Article IV,
old to remove it from the statutory Section 2, and the 14th Amendment;
38 July 2022 The Tax Adviser