Franklin v. United States

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

JAMES FRANKLIN, §

§

Plaintiff, §

§

v. § Civil Action No. 3:20-CV-1303-N

§

UNITED STATES OF AMERICA, et al., §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

This Order addresses Defendants’ (collectively, the “Government”) motion to

dismiss and for summary judgment [24].1 The Court concludes that it lacks jurisdiction

over most of Plaintiff Franklin’s claims. As to the remaining causes of action, Franklin

fails to state a claim upon which the Court may grant relief. Accordingly, the Court grants

the Government’s motion to dismiss in its entirety.

I. THE ORIGINS OF THE DISPUTE OVER TAX PENALTIES

This case involves several claims by a taxpayer stemming from or related to tax

penalties assessed against him by the Internal Revenue Service (“IRS”). The IRS

determined that Franklin had failed to report income from a foreign trust for the tax years

from 1998 to 2010. D.’s Mot. to Dismiss 2 [24]. In response, it assessed over $400,000 in

penalties against him. Pl.’s Am. Compl. ¶¶ 22, 24 [18]. To satisfy this liability, the IRS

1 Following the close of briefing on the motion to dismiss, the Government moved for leave

to file a notice of supplemental authority [32]. To the extent the foregoing analysis relies

on those authorities, the Court grants the motion.

has taken numerous steps, including levying on Franklin’s property, garnishing his Social

Security payments, and certifying his unpaid obligation to the State Department, resulting

in the revocation of his passport. Id. ¶¶ 23–24, 27, 33. Franklin chose not to follow the

normal path to contest the assessment of tax penalties, which is to pay the penalties and

pursue a refund action under 26 U.S.C. § 7422. Instead, he has attempted to evade that

exclusive path by a variety of end-arounds: He sought to obtain information via a Freedom

of Information Act (“FOIA”) request, attempted to secure a reduction in his debt via

settlement, and asserted various administrative claims for relief. Id. ¶¶ 25, 28, 34–35, 37.

The IRS refused to process Franklin’s written Offer in Compromise (“OIC”), spoiling his

hopes for a settlement of the debt, and rejected his other claims for relief. Id. ¶¶ 29, 31,

38–39.

At bottom, Franklin objects to the tax penalties because he believes the IRS failed

to observe certain procedural requirements before making the assessment, rendering the

penalties invalid. Id. ¶ 2. This assertion animates his first set of claims, most of them

under Title 26 of the U.S. Code (the “Tax Code”), which rely on the invalidity of the

underlying penalties. Franklin also asserts that the statute permitting the State Department

to revoke a delinquent taxpayer’s passport violates Fifth Amendment Due Process. Id. ¶

77. Finally, Franklin seeks fees and costs under FOIA. He alleges that the IRS wrongfully

withheld a requested document from him and finally produced it only in response to this

lawsuit. Id. ¶ 87. The Government has moved to dismiss under Rules 12(b)(1) and 12(b)(6)

for lack of jurisdiction or for failure to state a claim. Alternatively, the Government

requests summary judgment in its favor on any issue that the court cannot resolve in a

motion to dismiss.

II. RELEVANT LEGAL STANDARDS

Sovereign immunity undergirds the Government’s request that the Court dismiss

Franklin’s suit in its entirety. This principle generally prohibits claims against the federal

government or against its agents in their official capacity. FDIC v. Meyer, 510 U.S. 471,

475 (1994). Congress may, however, waive the immunity, but courts construe such

waivers narrowly. Lewis v. Hunt, 492 F.3d 565, 571 (5th Cir. 2007) (noting that “no suit

may be maintained against the United States unless the suit is brought in exact compliance

with the terms of a statute under which the sovereign has consented to be sued”) Absent a

valid abrogation of sovereign immunity, a court lacks jurisdiction over an action against

the federal government. Meyer, 510 U.S. at 475.

Because sovereign immunity implicates a court’s jurisdiction, the plaintiff in a suit

against the government bears the burden of establishing that a waiver of sovereign

immunity applies to each claim. See Ramming v. United States, 281 F.3d 158, 161 (5th

Cir. 2001) (observing that “the plaintiff constantly bears the burden of proof that

jurisdiction does in fact exist”). In assessing its jurisdiction in the context of a defendant’s

motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), the court may “weigh

the evidence and resolve factual disputes in order to satisfy itself that it has the power to

hear the case.” Montez v. Dep’t. of Navy, 392 F.3d 147, 149 (5th Cir. 2004). The court

may consider either the complaint alone, the complaint supplemented by undisputed facts

in the record, or the complaint supplemented by undisputed facts plus the court’s resolution

of disputed facts. Ramming, 281 F.3d at 161. “Ultimately, a motion to dismiss for lack of

subject matter jurisdiction should be granted only if it appears certain that the plaintiff

cannot prove any set of facts in support of his claim that would entitle plaintiff to relief.”

Id.

Rule 12(b)(6) permits a court to dismiss a plaintiff's complaint for failure to state a

claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). When addressing a rule

12(b)(6) motion to dismiss, the Court must determine whether the plaintiff has asserted a

legally sufficient claim for relief. Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th

Cir. 1995). To survive dismissal, a complaint must include “enough facts to state a claim

to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

To satisfy this standard, a plaintiff must plead factual content “that allows the court to draw

the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009). A plaintiff must provide “more than labels and

conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

Twombly, 550 U.S. at 555. A complaint, however, need not contain “detailed factual

allegations.” Ashcroft, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). The plaintiff's

factual allegations “must be enough to raise a right to relief above the speculative level on

the assumption that all the allegations in the complaint are true (even if doubtful in fact).”

Twombly, 550 U.S. at 555.

III. THE COURT LACKS JURISDICTION OVER

PLAINTIFF’S “SECTION 6751(B) CLAIMS”

Franklin, in his response to the Government’s motion to dismiss, groups several of

his claims under the heading of “Section 6751(b) claims,” referring to those predicated on

the alleged procedural deficiency underlying the tax penalty assessments. Finding this

convention helpful, the Court adopts this framework and addresses each claim in turn.

Fifth Circuit Precedent Requires Dismissal of Franklin’s Quiet Title Action

Franklin seeks to quiet title to property currently subject to liens filed by the IRS.

Pl.’s Am. Compl. ¶¶ 58–61. He invokes 28 U.S.C. § 2410, which provides a right of action

and waiver of sovereign immunity to quiet title to property on which the federal

government claims a lien. Id. § 2410(a)(1).

Fifth Circuit precedent forecloses Franklin’s claim. McCarty v. United States, 929

F.2d 1085 (5th Cir. 1991), involved a section 2410 action to quiet title to property

encumbered by a tax lien. The taxpayer argued that the court should enter judgment in his

favor because “the tax [underlying the lien] was not properly assessed from a procedural

standpoint.” 929 F.2d at 1087. The district court granted the government’s motion to

dismiss, reasoning that sovereign immunity deprived it of jurisdiction to entertain a

challenge to the validity of the tax in a section 2410 action. Id. On appeal, the Fifth Circuit

agreed, holding that a “taxpayer cannot contest the existence or validity of the tax

assessment in an action under § 2410.” Id. at 1088. The dismissed portion of the taxpayer’s

claim in McCarty exactly mirrors Franklin’s section 2410 claim. Like the plaintiff in

McCarty, Franklin alleges only that the IRS failed to observe procedural requirements in

the assessment of the tax penalties against him, rendering them invalid. Accordingly, the

Court dismisses Franklin’s quiet title claim for want of subject matter jurisdiction.

The Court Lacks Jurisdiction Over Franklin’s Section 7432 Claim

Franklin also seeks damages for the allegedly wrongful failure to release liens on

his property. Pl.’s Am. Compl. ¶ 47. Section 7432 of the Tax Code provides a private

right of action and waiver of sovereign immunity to seek damages against the federal

government to remedy a knowing or negligent failure to release a lien when required by 28

U.S.C. § 6325. 28 U.S.C. § 7432(a). Section 6325, in turn, provides for the timely release

of a lien on a taxpayer’s property if the “Secretary [of the Treasury] finds that the liability

for the amount assessed . . . has been fully satisfied or become legally unenforceable” or if

the taxpayer furnishes — and the Secretary accepts — a bond securing payment of the

assessed liability. 28 U.S.C. § 6325(a)(1)–(2). Franklin alleges that procedural

deficiencies in the assessment of the tax penalties rendered the liability unenforceable from

the start, requiring the Government to release the liens on his property under section 6325.

The Court lacks jurisdiction over Franklin’s claim. The waiver of sovereign

immunity in section 7432 does not extend to challenges to the validity of the assessment.

McIver v. United States, 650 F. Supp. 2d 587, 592 (N.D. Tex. 2009) (citing Gandy Nursery,

Inc. v. United States, 318 F.3d 631, 636 (5th Cir. 2003)); see also Pollinger v. I.R.S.

Oversight Bd., 362 F. App’x 5, 12 (11th Cir. 2010) (holding that section 7432 does not

“allow for actions regarding assessment of tax liability”). Franklin does not allege that the

Secretary of the Treasury or any officer or employee exercising the Secretary’s authority

has found his tax liability unenforceable. In fact, the Government strenuously affirms the

validity of the underlying assessment.2 Franklin’s theory of entitlement to relief rests upon

his determination that the underlying tax penalty suffers from a fatal procedural defect; in

other words, he seeks to test the validity of the assessment. Section 7432, however, does

not permit such a challenge. Because the allegations supporting Franklin’s claim fall

outside the narrow waiver of sovereign immunity included in the statute, the Court lacks

subject matter jurisdiction over the claim.

The Court Lacks Jurisdiction Over Franklin’s Section 7433 Claim

Franklin seeks damages under another provision of the Tax Code, Section 7433.

This section provides taxpayers with a cause of action to pursue damages for wrongful

conduct by the IRS or its agents in the collection of taxes. 28 U.S.C. § 7433(a)–(b).

The Court lacks jurisdiction over this claim. As in the case of claims for wrongful

failure to release a tax lien under section 7432, a taxpayer may not use a section 7433

wrongful collection action to litigate the validity of the underlying assessment that gave

rise to the allegedly improper collection activity. Gandy Nursery, 318 F.3d at 636 (5th Cir.

2003) (citing Shaw v. United States, 20 F.3d 182, 184 (5th Cir. 1994)). As the Court has

already noted, the allegation that the IRS failed to observe section 6751(b) procedural

requirements in assessing penalties against Franklin constitutes a challenge to the validity

of the assessment. Fifth Circuit precedent makes clear that an attempt to bring such a claim

under section 7433 falls outside the court’s jurisdiction. Shaw, 20 F.3d at 184. Thus,

2 The lack of any finding of unenforceability by the IRS distinguishes this case from,

Miklautsch v. Gibbs, 1990 WL 236045 (D. Alaska Nov. 6, 1990), the sole authority that

Franklin relies on for support of his section 7432 claim.

Franklin’s section 6751(b) allegations fail to properly invoke the waiver of sovereign

immunity in section 7433.

Franklin also raises a second, distinct, argument in support of his section 7433

claim. He submitted two Offers-in-Compromise to the IRS, each of which the agency

returned as nonprocessable. Ex. A to Pl.’s Am. Compl. 6–13, 18, 37, 43–49 [18-1]. In

both OICs, Franklin raised the same section 6751(b) argument that he makes in this lawsuit,

and he offered to settle the liability for a nominal sum. Id. at 8, 11–13, 20, 47–49. While

he attempted to settle the matter, the IRS filed a lien on his property. See id. at 27. This

chain of events, Franklin contends, constitutes improper collection activity entitling him to

damages under section 7433.

While the Fifth Circuit has never considered such a claim, the well-reasoned

opinions of courts in other circuits suggest that such a claim falls outside the sovereign

immunity waiver in section 7433. Addington v. United States, 75 F. Supp. 2d 520 (S.D.W.

Va. 1999) serves as a good example. In that case, the taxpayer contested the validity of the

liability the IRS sought to collect, and the IRS returned his OIC without processing it. Id.

at 522. Shortly thereafter, the IRS levied on the taxpayer’s property, and the taxpayer

brought a section 7433 action seeking damages for this allegedly improper collection

activity. Id. 522–23. The court rejected the claim. First, the court questioned whether it

even possessed the power to compel the IRS to engage in a compromise that it had

previously rejected. Id. at 524 (citing Carroll v. IRS, 14 A.F.T.R..2d 5564 (E.D.N.Y. 1966)

(“The decision to accept or reject a compromise offer by its nature involves the discretion

of administrative authority and [cannot] be compelled by any action for a mandatory

injunction.”)). More fundamentally, the taxpayer’s ultimate objection concerned the

validity of the underlying tax. Id. at 523–24. Permitting such an action under section 7433

would “‘allow taxpayers to circumvent’ the requirement[]” that they pursue refund suits to

challenge improper assessments. Id. at 524 (quoting Gonsalves v. IRS, 975 F.2d 13, 16

(1st Cir. 1992)). The court held that the OIC allegation could not support a 7433 claim.

Id.

Franklin’s section 7433 claim based on the return of his OICs also fails. The

relevant factual allegations in this case bear remarkable resemblance to those made by the

taxpayer in Addington. The Court agrees with the reasoning in that case. As evidenced by

the substance of the OICs he submitted, Franklin ultimately rejects the validity of the tax

penalties and has sought to use the OIC process to litigate this contention. He now seeks

to use a section 7433 claim to test the validity of the tax assessment in this action, thereby

circumventing the well-established policy that such challenges should come only via the

mechanism of a refund suit. Accordingly, the Court concludes that it lacks jurisdiction

over the entirety of Franklin’s section 7433 claim.

The Court Dismisses Franklin’s Declaratory Judgment Action

Franklin includes a general request for declaratory relief as provided for in the

federal Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201. Pl.’s Am. Compl. ¶¶ 63–

64.

The plain language of the DJA prohibits this court from entertaining this action.

The DJA permits federal courts to “declare the rights and other legal relations of any

interested party seeking such declaration” in a “case of actual controversy” within the

court’s jurisdiction. Id. § 2201(a). This grant of authority, however, does not extend to

cases “with respect to Federal taxes.” Id. The Fifth Circuit has held that attempts by

taxpayers to challenge the validity of a tax assessment via declaratory judgment actions

runs afoul of this express limitation in the DJA. McCarty, 929 F.2d at 1088. Because

Franklin’s request for declaratory relief includes no additional allegations beyond those

already considered, the Court holds that it lacks jurisdiction to render declaratory judgment

in this case “with respect to Federal taxes.”

The Court Lacks Jurisdiction to Review the IRS’s Action Under the APA

Franklin also seeks review of the assessment of the tax penalties and return of his

OICs under the Administrative Procedure Act (“APA”), 5 U.S.C. § 551 et seq. The APA

creates a cause of action allowing a person aggrieved by agency action to obtain judicial

review. Id. § 702. Section 702 of the APA includes a waiver of sovereign immunity, but

this waiver only applies where not limited by another, more specific provision. Id.;

McCarty, 929 F.2d at 1088.

A taxpayer may not bring an action under the APA to challenge the validity of a tax

assessment. The Anti-Injunction Act (“AIA”), 26 U.S.C. § 7421, incorporated in the Tax

Code, provides that “no suit for the purpose of restraining the assessment or collection of

any tax shall be maintained in any court by any person,” except in the case of specific

provisions of the Tax Code not relevant in this case. Id. § 7421(a). The “manifest purpose

of [the AIA] is to permit the United States to assess and collect taxes alleged to be due

without judicial intervention, and to require that the legal right to the disputed sums be

determined in a suit for refund.” Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7

(1962). The Fifth Circuit has held that the AIA bars challenges to the validity of a tax

assessment under the APA. McCarty, 929 F.2d at 1088.

The AIA forecloses Franklin’s APA challenge based on the alleged procedural

defect in the tax penalties assessed against him. This allegation constitutes a challenge to

the validity of the assessment itself. As McCarty makes clear, a federal court lacks

jurisdiction to consider a challenge to the validity of a tax assessment styled as an APA

suit. Accordingly, the Court concludes that this allegation cannot support an APA

challenge.

Franklin also alleges that the IRS improperly failed to consider his OIC, and he asks

the court to review that action under the APA. Franklin sent two OICs to the IRS, offering

a nominal settlement and reiterating his contention that procedural defects rendered the

assessments against him invalid. Ex. A to Pl.’s Am. Compl. 6–13, 43–49. The IRS

returned these offers without accepting them for processing. Id. 18, 37. According to

Franklin, when the IRS accepts an OIC for processing, it must cease certain collection

activities — including levying on the taxpayer’s property — while the OIC remains under

consideration. Pl.’s Resp. to D.’s Mot. to Dismiss 15 [28] No such suspension of collection

activities occurs when the IRS returns an OIC as nonprocessable. Id. Franklin asks this

Court to review the return of his OICs, contending that the IRS abused its discretion in

refusing to accept them for consideration.

The AIA prevents the court from reviewing the IRS’s actions in this case. Actions

of the IRS do not fall entirely outside the purview of the APA; courts may properly review

some IRS actions and should hesitate in accepting the contention — often raised by the

Government in tax cases — that “no challenge to [the IRS’s] actions is ever outside the

closed loop of its taxing authority.” Cohen v. United States, 650 F.3d 717, 726–27 (D.C.

Cir. 2011) (en banc). In this case, however, Franklin primarily objects to the return of his

OIC because that action prevented a suspension of collection activities from coming into

effect. Assuming without deciding that the Court even has the power to interfere with the

IRS’s largely discretionary compromise process, the Court could offer Franklin no relief

beyond directing the IRS to process his OIC. The agency would retain substantial

discretion to reject his OIC, but such an injunction would prohibit ongoing collection

actions against Franklin in the meantime. The AIA, prohibiting as it does any suit “for the

purpose of restraining the assessment or collection of any tax,” forbids review under these

circumstances. Having concluded that the two bases asserted to support review under the

APA run afoul of a more specific provision of the Tax Code, the Court dismisses the entire

claim for want of jurisdiction.

The Court Dismisses Franklin’s Challenge to the Revocation of His Passport

Franklin seeks judicial review of the certification of his delinquent liability to the

State Department — which resulted in the revocation of his passport. Pl.’s Am. Compl. ¶¶

69–74. Section 7345 of the Tax Code provides a mechanism by which the IRS certifies

seriously delinquent tax liabilities to the State Department. 26 U.S.C. § 7346(a). The State

Department, then, may revoke or limit the taxpayer’s previously issued passport. 22 U.S.C.

§ 2714a(e)(2). Section 7345 includes a private right of action permitting federal court

review of the certification of a taxpayer’s debt. 26 U.S.C. § 7345(e)(1).

The Court lacks jurisdiction over Franklin’s section 7345(e)(1) claim. In support of

this claim, Franklin reprises the same argument he made in his quiet title action. Section

7345 requires that the tax debt must be legally enforceable for certification to be proper.

Because, according to Franklin, the tax penalties suffer from a fatal procedural defect, they

have always been unenforceable. Franklin urges the Court to reverse the certification of

the allegedly unenforceable debt. The Court concludes that the same policy considerations

that led the Fifth Circuit to hold that taxpayers may not contest the validity of an assessment

in a quiet title action apply with equal force to a section 7345(e) claim such as this. The

Court lacks jurisdiction over this claim.

IV. THE COURT LACKS JURISDICTION OVER

FRANKLIN’S EIGHTH AMENDMENT CLAIM AND

DISMISSES HIS FIFTH AMENDMENT CHALLENGE

Franklin advances two constitutional claims, seeking a declaratory judgment or an

injunction3 as to each. First, Franklin claims that the penalties assessed against him violate

the Eighth Amendment’s Excessive Fines clause. Pl.’s Am. Compl. ¶ 80. Second, Franklin

argues that the statutory scheme permitting the State Department to revoke a delinquent

taxpayer’s passport violates the Fifth Amendment’s Due Process Clause. Id. ¶¶ 76–79.

3 Franklin asks for only a declaratory judgment in the body of his Amended Complaint.

Pl.’s Am. Compl. ¶ 79. In the section title “Summary Overview,” however, he asks the

court to render “declaratory and/or injunctive relief” to remedy the alleged constitutional

violation. Id. ¶ 13. Accordingly, the Court will construe the complaint as a request for

both forms of relief.

The Court Must Consider Statutory Limitations on Its Jurisdiction in Tax Cases

Two relevant statutory provisions limit the power of federal courts to render the

relief requested in cases related to federal taxes. The Declaratory Judgment Act (“DJA”)

empowers federal courts to “declare the rights and other legal relations of any interested

party” to any “case of actual controversy within its jurisdiction, except with respect to

Federal taxes.” 28 U.S.C. § 2201(a) (emphasis added). This limitation goes to the court’s

jurisdiction. Rivero v. Fidelity Invs., Inc., 1 F.4th 340, 345 (5th Cir. 2021). And, as noted

previously, the Tax Code’s AIA provision limits the jurisdiction of the federal courts to

entertain lawsuits restricting the collection or assessment of federal taxes. The Fifth Circuit

has agreed with the Supreme Court that the limitation in the DJA applies at least as broadly

as the AIA. McCabe v. Alexander, 526 F.2d 963, 965 (5th Cir. 1976) (quoting Bob Jones

Univ. v. Simon, 416 U.S. 725, 732 n.7 (1974)). In fact, a recent Fifth Circuit decision

implies that the limitation in the DJA may restrict the jurisdiction of a court even further

than the AIA. Rivero, 1 F.4th at 345–46 (suggesting the AIA would not have applied on

the facts of the case but holding that the tax exception to the DJA rendered the District

Court without jurisdiction to provide declaratory relief). Because the tax exception to the

DJA goes at least as far as — and perhaps further than — the AIA, the foregoing analysis

will focus on the latter.

The Court Lacks Jurisdiction Over Franklin’s Eighth Amendment Challenge

The Court lacks jurisdiction over Franklin’s Excessive Fines Clause challenge.

Enjoining collection of the tax penalties or declaring that the assessment itself violated the

Eighth Amendment would, by definition, restrain the collection of a tax. Merely couching

an argument against the validity of a tax assessment in constitutional terms will not allow

a court to entertain the claim in contravention of the AIA. See, e.g., Bob Jones Univ., 416

U.S. at 736–37. Franklin can properly raise this claim in a refund suit. Accordingly, the

Court dismisses the Eighth Amendment challenge as beyond its jurisdiction.

The AIA Does Not Foreclose Review of Franklin’s Fifth Amendment Claim

The State Department’s authority to revoke Franklin’s passport comes from a 2015

act of Congress called the Fixing America’s Surface Transportation Act (“FAST Act”),

Pub. L. 114-94, 129 Stat. 1312 (2015). The FAST Act amended the Tax Code to require

the IRS to certify unpaid tax liabilities exceeding $50,000 (indexed to inflation) to the State

Department as “seriously delinquent tax debts.” 26 U.S.C. § 7245(a)–(b). The definition

of “seriously delinquent” incorporated key procedural safeguards by requiring that the debt

must have already given rise to a lien or levy to qualify. 26 U.S.C. § 7345(b)(C). The

FAST Act prohibited the State Department from issuing a passport to the tax debtor whose

liability had been certified and empowered it to revoke any previously issued passports in

the taxpayer’s name. 22 U.S.C. § 2714a(e)(1)–(2). Upon satisfaction of the liability, the

statute required the IRS to decertify the debt as promptly as it must release a lien under

section 6325 of the Tax Code. 26 U.S.C. § 7345(c).

By its plain terms, the AIA would ordinarily apply to this claim. First, the Court

notes that the means by which a taxpayer may have his passport reinstated substantially all

involve satisfying the tax debt. Second, the provisions of the FAST Act largely implement

the recommendations in a Government Accountability Office (“GAO”) report from 2011

focusing on tax collection. See U.S. GOV’T ACCOUNTABILITY OFF., GAO 11-272,

FEDERAL TAX COLLECTION: POTENTIAL FOR USING PASSPORT ISSUANCE TO INCREASE

COLLECTION OF UNPAID TAXES 17 (2011). That report urged Congress to consider

conditioning passport issuance on tax compliance to “generate substantial collections of

known unpaid federal taxes.” Id. at 16. Based on the statute’s structure and history, the

Court concludes that an injunction against the Secretary of State requiring reinstatement of

Franklin’s passport would constitute a restriction on collection activity, in contravention of

the AIA.

The Supreme Court has, however, carved out an exception to the AIA where the

aggrieved party would not have an adequate alternative remedy outside the proceeding

before the court. South Carolina v. Regan, 465 U.S. 367, 378 (1984). In Regan, South

Carolina sought to test the constitutionality of a change to the Tax Code that conditioned

the tax-exempt status of state-issued debt securities on registration of the bonds. Id. at

370–71. Because bondholders, not the issuing state or municipality, pay taxes on taxable

debt securities, South Carolina could not bring a refund action itself. Id. at 379–80. The

only conceivable mechanism to challenge the statute — issuing unregistered bonds and

relying on a purchaser to bring a refund suit to test the propriety of the statute — involved

substantial uncertainty and could not constitute an adequate alternative remedy. Id. at 380–

81. While some divergence exists between the circuits as to the breadth of the holding in

Regan, the Fifth Circuit recently noted that some “circuits — including ours, though we

have not discussed Regan at length — view the exception more broadly.” In re

Westmoreland Coal Co., 968 F.3d 526, 536 (5th Cir. 2020)

Franklin’s Fifth Amendment challenge may proceed under the Regan exception.

Franklin argues that the structure of the passport revocation scheme means that no adequate

alternative remedy exists to advance his constitutional challenge. The AIA otherwise

prohibits him from challenging the statute without first satisfying the obligation. If he does

so, however, the IRS will need to decertify the debt, resulting in a reversal of the revocation.

Thus, Franklin could challenge the assessment through a refund suit, but the decertification

of his tax debt would render his constitutional challenge moot. Deprived of the opportunity

to present his constitutional challenge via a refund suit, Franklin lacks an adequate

alternative to this action, and the Regan exception to the AIA applies to this claim.

Franklin’s FAST Act Challenge Fails, Warranting Dismissal Under Rule 12(b)(6)

Procedural Background. — The Government has requested dismissal under

Rule 12(b)(6) or, alternatively, summary judgment pursuant to Rule 56. Other federal

district courts to have considered the constitutionality of the FAST Act have proceeded

both under Rule 12(b)(6) and under Rule 56. Because the inquiry before us does not — in

the main — depend on the development of the factual record, the Court elects to proceed

under the Rule 12(b)(6) framework.

Franklin alleges that the IRS certified his tax debt to the State Department and that,

subsequently, the State Department revoked his passport. Pl.’s Am. Compl. ¶ 27. He

objects to the constitutionality of the statutory provisions authorizing this revocation as

violative of his procedural and substantive Due Process rights.4 Specifically, Franklin

4 Franklin objects to the provision facially and as applied. He makes no allegations from

which the Court can infer that the IRS or State Department has treated him differently than

contends that the Supreme Court has recognized the right to travel internationally as a

fundamental right, triggering strict scrutiny of any law abridging that right. The Court

disagrees, holding that no precedent clearly establishes the right to international travel as

fundamental and that the FAST Act withstands rational basis review.

Procedural Due Process. — Franklin’s procedural due process challenge fails

as a matter of law. In his amended complaint, Franklin merely asserts that the current

procedures used to revoke a taxpayer’s passport pursuant to the FAST Act violate

procedural due process; he does not specifically identify the property or liberty interest

deprived through these procedures. See Pl.’s Am. Compl. ¶ 78. The Supreme Court has

previously rejected a vested rights approach to the issuance or revocation of a passport by

affirming that the Secretary of State can exercise substantial discretion in issuing or

revoking travel documents. See Haig v. Agee, 453 U.S. 286, 306 (1981). Even if due

process demanded a predeprivation hearing, a taxpayer subject to passport revocation

would have an opportunity to make his case before certification to the State Department.

While the FAST Act itself makes no provision for a predeprivation hearing, only those

taxpayers subject to a properly noticed lien or on whose property the Government has

levied face passport revocation. The mechanism of the Collection Due Process hearing

gives such a taxpayer ample opportunity to contest his tax debt prior to certification to the

State Department. Accordingly, the Court rejects Franklin’s procedural due process

challenge.

any other taxpayer whose debt meets the statutory criteria. As such, the Court limits its

analysis to the facial unconstitutionality of the FAST Act.

Substantive Due Process. — The Fifth Amendment prohibits action by the

federal government that works a deprivation of “life, liberty, or property without due

process of law.” U.S. CONST. amend. V. This due process protection includes procedural

and substantive components. Substantive due process “protects individual liberty against

‘certain government actions regardless of the fairness of the procedures used to implement

them.’” Collins v. City of Harker Heights, 503 U.S. 115, 125 (1992) (quoting Daniels v.

Williams, 474 U.S. 327, 331 (1986)).

Courts analyzing a substantive due process challenge must first identify the proper

level of scrutiny to apply. As a default, courts apply rational basis review — asking

whether the challenged statute is rationally related to a legitimate governmental interest.

Reyes v. N. Tex. Tollway Auth. (NTTA), 861 F.3d 558, 562 (5th Cir. 2017). If the challenged

law infringes on a right considered fundamental, however, strict scrutiny applies.

Washington v. Glucksberg, 521 U.S. 702, 721 (1997). Under strict scrutiny, the court asks

whether the infringement resulting from the challenged statute is narrowly tailored to

achieve a compelling governmental interest. Id. (citing Reno v. Flores, 507 U.S. 292, 302

(1993)).

Fundamental rights subject to strict scrutiny must have a substantial basis in

historical practice. The Supreme Court has limited the recognition of fundamental rights

to those deeply rooted in the history and tradition of the United States. Glucksberg, 521

U.S. at 720–21. Put another way, fundamental rights are “implicit in the concept of ordered

liberty, such that neither liberty nor justice would exist if they were sacrificed.” Id. at 721

(internal quotation marks omitted). Importantly, the Supreme Court has cautioned that

courts should hesitate to “break new ground in” expanding substantive due process

protections “because guideposts for responsible decisionmaking in this uncharted area are

scarce and open-ended.” Id. at 720.

Franklin contends that the revocation of his passport infringes on his right to

international travel, a position the Government does not contest. The Court agrees that the

FAST Act’s passport revocation provision substantially interferes with Franklin’s ability

to travel overseas and turns to the question of whether this freedom constitutes a

fundamental right.

The Supreme Court has treated the freedom of interstate travel as fundamental.

Though not expressly identified in the Constitution, “freedom to travel throughout the

United States has long been recognized as a basic right under the Constitution” and

“fundamental to the concept of our Federal Union.” United States v. Guest, 383 U.S. 745,

757–58 (1966). The Court has applied strict scrutiny to laws infringing on this right. See

Shapiro v. Thompson, 394 U.S. 618, 634 (1969); Dunn v. Blumstein, 405 U.S. 330, 338–

39 (1972). The right to travel within the United States, however, differs from the right to

travel internationally — only the latter of which the revocation of a passport restricts.

A review of relevant Supreme Court cases suggests that infringements on the

freedom of international travel merit lesser scrutiny than restrictions on domestic travel. In

a series of cases in the mid-twentieth century, the Court employed language seeming to

equate international and interstate travel, but the Court never expressly held that

international travel constituted a fundamental right. See Kent v. Dulles, 357 U.S. 116, 125–

26 (1958) (noting the “right to travel is part of the ‘liberty’ of which the citizen cannot be

deprived without due process of law under the Fifth Amendment”); Aptheker v. Secretary

of State, 378 U.S. 500, 517 (1964) (musing that “freedom of travel is a constitutional liberty

closely related to rights of free speech and association”); Zemel v. Rusk, 381 U.S. 1, 15–16

(1965) (comparing international and interstate travel to the extent that the government may

impinge on either freedom in the face of adequately compelling national security interests).

In subsequent cases, the Court distanced itself from the language in these earlier decisions

that treated “the right to travel within the United States and the right to travel abroad . . .

indiscriminately,” noting that any equivalence had “been rejected in subsequent cases.”

Regan v. Wald, 468 U.S. 222, 241 n.25 (1984) (citing Haig, 453 U.S. at 306 and Califano

v. Aznavorian, 439 U.S. 170, 176–77 (1978)). After examining this line of cases, a few

things become clear. First, nearly all the discussion of the relationship between

international and domestic travel can be construed as dicta, cautioning against relying

unduly on any one case. Second, holistic review of the cases reveals a big-picture trend

toward a meaningful distinction between interstate and international travel. The former

observation increases the relative importance of the latter in deducing the level of

protection that the Court should afford international travel. Accordingly, the Court

concludes that in the face of a clear trend against such a conclusion, the right to

international travel is not fundamental.

Other Circuits have refused to find a fundamental right to international travel.

Reviewing a Rule 12(b)(6) dismissal of a nearly identical challenge to the FAST Act’s

passport revocation provisions, the Tenth Circuit applied the rational basis test in affirming

the District Court. Maehr v. U.S. Dep’t. of State, 5 F.4th 1100, 1119 (10th Cir. 2021).

Likewise, the Ninth Circuit upheld a similar passport revocation law (this one targeting

individuals who had failed to make child-support payments) after subjecting the law to

rational basis review. Eunique v. Powell, 302 F.3d 971, 974 (9th Cir. 2002). With an eye

toward the work done by those who have already tread this ground and cognizant of the

Supreme Court’s admonition that courts hesitate before expanding the scope of substantive

due process, the Court holds that the infringement of the right to international travel merits

rational basis review.

A challenged statute subject to rational basis review will survive so long as the Court

can find a reasonable fit between the legitimate purpose and the means chosen to achieve

it. Importantly, the Court can handle this task at this stage of the proceedings because the

interest advanced to “show rationality need not be the actual or proven interest” motivating

the statute. Reyes, 861 F.3d at 563. In other words, the Court may accept the Government’s

contentions so long as some connection exists “between the policy effected by the statute

and a ‘conceivable’ interest.” Id. (citing FM Props. Operating Co. v. City of Austin, 93

F.3d 167, 175 (5th Cir. 1996)).

The FAST Act passes the test. Few interests exceed the efficient and timely

collection of taxes in importance — without the predictable revenue generated by taxes the

Government would risk failing to satisfy its debts, destabilizing the entire dollar-

denominated financial system. This interest motivated Congress to adopt provisions such

as the AIA and tax exception to the DJA. The previously discussed GAO report lays out

in detail the case for conditioning the benefit of a U.S. Passport on tax compliance,

suggesting that such a policy could improve the collection of known, unpaid tax liabilities.

This would, in turn, improve the predictability of the Government’s revenue stream.

Accordingly, the Court holds that the FAST Act has a rational basis and dismisses

Franklin’s constitutional challenge for failure to state a claim.

V.THE COURT DENIES FRANKLIN’S

REQUEST FOR ATTORNEY’S FEES AND COSTS

Franklin asks for attorney’s fees and costs, invoking three independent statutory

bases for the request. Having filed a FOIA request for documents related to his case,

Franklin alleges that the IRS wrongfully withheld certain documents until finally producing

them in response to his original complaint. He requests attorney’s fees and costs under the

provision of FOIA authorizing courts to make such an award to an individual who has

succeeded, through litigation, to compel an agency to make a production of documents.

Alternatively, Franklin request fees and costs under a provision of the Tax Code and under

28 U.S.C. § 2412. The Court denies the request on all grounds.

FOIA authorizes courts to grant attorney’s fees and costs to prevailing litigants.

5 U.S.C. § 552(a)(4)(E). This provision “divides the attorney-fee inquiry into two prongs[:]

. . . fee eligibility and fee entitlement. The eligibility prong asks whether a plaintiff has

substantially prevailed and thus may receive fees. If so, the court proceeds to the

entitlement prong and considers a variety of factors to determine whether the plaintiff

should receive fees.” Batton v. IRS, 718 F.3d 522, 525 (5th Cir. 2013) (quoting Brayton v.

Office of the U.S. Trade Representative, 641 F.3d 521, 524 (D.C. Cir. 2011)).

An agency’s voluntary change in position can give rise to a finding that the plaintiff

substantially prevailed. A plaintiff can demonstrate eligibility for attorney’s fees by

securing a court order or by showing that “prosecution of the action could reasonably be

regarded as necessary to obtain the information and that the action had a substantive

causative effect on the delivery of the information. Id. (quoting Lovell v. Alderete, 630

F.2d 428, 432 (5th Cir. 1980)). In other words, if the plaintiff can show “voluntary or

unilateral change in position by the agency” primarily resulting from the litigation, then

the plaintiff can demonstrate eligibility for fees and costs. 5 U.S.C. § 552(a)(4)(E).

Two years prior to the commencement of this case, Franklin requested all

information related to the tax penalties from the IRS. Pl.’s Am. Compl. ¶ 5. In response,

the IRS produced documents, attesting full compliance with the request. Id. In response

to Franklin’s original complaint instigating this proceeding, however, the IRS produced a

new document purporting to show compliance with section 6751(b) of the Tax Code. Id.

¶ 14, n.1.

Based on this factual background, Franklin can demonstrate eligibility under this

standard. As it must at this stage, the Court takes as true Franklin’s allegations that his

request unambiguously requested the withheld document, that he attempted to clarify that

the IRS had fully complied, and that he made other attempts to obtain documentary proof

of the IRS’s procedural compliance before instituting this proceeding. The Government

does not seriously dispute any of these allegations or provide any reason why the IRS failed

to make the disclosure. From this, the Court infers that the IRS would not have disclosed

the information absent this proceeding. Thus, the Court holds that Franklin can show his

eligibility under 5 U.S.C. § 552(a)(4)(E).

At the entitlement phase, however, courts retain discretion to award fees. In this

circuit, courts apply a four-prong balancing test as a guide. The court must weigh “(1) the

benefit to the public deriving from the case; (2) the commercial benefit to the complainant;

(3) the nature of the complainant's interest in the records sought; and (4) whether the

government's withholding of the records had a reasonable basis in law.” Batton, 718 F.3d

at 527 (quoting Texas v. ICC, 935 F.2d 728, 730 (5th Cir. 1991)).

These factors weigh against awarding attorney’s fees and costs in this case.

Although the final factor must go against the Government because it has not advanced any

justification for the failure to make the disclosure in response to the initial FOIA request,

the other factors weigh more strongly against Franklin. The first two factors largely merge:

The document sought has little to no public interest value and Franklin sought it solely to

use in challenging his personal tax liability. Given the public-minded purpose of FOIA

courts give less weight to suits challenging allegedly wrongful withholding of information

that only has relevancy to a specific individual for that individual’s pecuniary gain. And

the third factor weighs even more heavily against awarding fees and costs. Franklin lacks

a substantial interest in the records, insofar as he did not actually want the IRS to disclose

the document at issue. In fact, Franklin hoped that no such document actually existed. The

nonexistence of such a document animates Franklin’s underlying objection to the validity

of the penalties, which motivated this action. But the Court lacks jurisdiction over his

attempts to litigate that issue in this proceeding. To properly contest the validity of the

assessment, Franklin must pay the penalties and pursue a refund action. Even if the IRS

had produced the document initially, Franklin would have been in the same position: He

would have had no choice but to pay the tax liabilities. That pursuing this ill-fated action

has inadvertently corrected the allegedly wrongful withholding by the IRS does not, in and

of itself, warrant an award of fees and costs.

As to Franklin’s request for fees and costs under 26 U.S.C. § 7430, the Court denies

the request. Section 7430 allows for an award of “reasonable litigation costs incurred in

connection with” a proceeding against the United States. 26 U.S.C. § 7430(a)(1).

Likewise, 28 U.S.C. § 2412 generally permits the court to award costs and fees. These

statutes, however, allow the court to award fees and costs only to the “prevailing party.”

Id.; 26 U.S.C. § 7430(a)(1). Having dismissed all of Franklin’s claims, the Court may not

award fees and costs.

CONCLUSION

Based on the foregoing, the Court determines that it lacks jurisdiction over

Franklin’s section 6751(b) claims and his Eighth Amendment challenge.° The Court also

dismisses his Fifth Amendment challenge for failure to state a claim and declines to award

fees and costs.

Signed September 29, 2021.

United States District Judge

> The Court notes that Franklin did not seek leave to amend in his response to the

Government’s motion to dismiss.

ORDER — PAGE 26