The case of Garcia v. Commissioner, 157 T.C. No. 1 (2021) provides clarity and guidance on the Tax Court’s jurisdiction in passport cases as the Court issues a precedential opinion to make clear some of the things that can and cannot happen in a contest regarding the certification of passport revocation. I did not find the decision surprising. The Court’s passport jurisdiction is quite limited. Petitioners will generally be disappointed in the scope of relief available through this new type of Tax Court jurisdiction.
This is a precedential opinion decided in a case in which the taxpayer was unrepresented. Precedential opinions in cases in which the taxpayer is unrepresented concern me. They bind future litigants to a position in which the only arguments to the court may have come from the Government. Before issuing a precedential opinion, it would seem better for the system if the court would seek an amicus or some voice with the ability to make cogent legal arguments from the taxpayer’s perspective. In this case, the outcome may not have changed, but maybe arguments on behalf of the taxpayer would have shifted the outcome.
In early 2020, back when a passport had more meaning than it has had during the pandemic, the IRS certified both Mr. and Mrs. Garcia to the State Department for revocation of their passports because of their joint tax debt, which was seriously delinquent as defined in IRC 7435(b). They filed a Tax Court petition to contest the revocation. At some point after filing the petition, Mr. Garcia passed away.
In November of 2020, the IRS reversed its certification because they submitted a processable doubt as to liability offer in compromise. In January of 2021, the IRS filed a motion to dismiss the Tax Court case on the grounds of mootness, arguing that there was no further relief the Tax Court could grant in this case at this time.
Prior to filing the doubt as to liability offer, petitioners had filed an amended return, which the IRS rejected. That signals petitioners should not get their hopes too high on the likelihood of a positive outcome based on the doubt as to liability offer. Nonetheless, the acceptance of the offer for processing serves as a basis for decertification of the passport revocation, leaving them clear to travel in the short term. If the IRS rejects the doubt as to liability offer, it seems likely that at some point, absent payment of the almost $600,000 liability, the IRS would certify the passport for revocation again.
The court first addresses whether a married couple can file a joint petition in the Tax Court based on separate notices of passport revocation stemming from a joint liability. The court notes that both the statute and the Tax Court Rules are silent on this point. The IRS did not object to this aspect of the case but, whether or not the IRS cares, the court cares because it is bound to consider whether it properly has jurisdiction and wants to get this right. It also footnotes that the statute is silent as to a time frame for filing a passport revocation case, as it had discussed in an earlier passport case of Ruesch v. Commissioner, 154 T.C. 289, 295 (2020).
The court looks to Tax Court Rule 34(a)(1) which governs filing a petition in a “Deficiency or Liability Action.” After describing the rule, the court noted that the Garcias received substantially identical notices of certification and raised the identical question in their Tax Court case. It finds that equity and common sense support allowing a joint petition. It points out that causing them to file separate petitions would result in unnecessary delay and expense. (Petitioners save the $60 filing fee by jointly filing in addition to other costs duplicate filing would entail.) It points out that had they filed separately, the court would almost certainly have consolidated their cases which, while true, is something that happens with respect to many petitions that cannot be jointly filed. It finds an appropriate analogy in Collection Due Process (CDP) cases where neither the statute nor the rules discuss joint filing but where it has nevertheless been allowed. Interestingly, the court cites only to non-precedential CDP cases in support of the analogy. So, it holds that petitioners may file a joint petition in a passport case.
Next, it looks at the issue of its authority in a passport case. It finds that:
If we find that a certification was erroneous, we “may order the Secretary [of the Treasury or her delegate] to notify the Secretary of State that such certification was erroneous.” Sec. 7345(e)(2). The statute specifies no other form of relief that we may grant.
As mentioned above, the relief under this provision is very narrow. Having confirmed the narrow scope of its jurisdiction in these cases, the court moves on to the mootness question raised by the motion to dismiss.
First, the court notes that the husband’s death might render his case moot. Hard to argue with that conclusion given the narrow scope of relief the court can grant, but the court cites to a non-tax case where the seemingly obvious conclusion of mootness was found inappropriate since certain rights with respect to a passport might survive death:
In Magnuson v. Baker, 911 F.2d 330, 331-332 (9th Cir. 1990), the State Department revoked the passport of a Canadian citizen, “asserting that the passport had been issued in error.” The passport holder filed suit to challenge the revocation, but later died, and the Government urged that his claim had become moot. Id. at 332 n.4. The Ninth Circuit disagreed, ruling that “various legal interests may still turn on whether * * * [he] could retain his passport.”
So, the court moves forward with respect to both parties and finds that the decertification by the IRS moots the Tax Court case:
Although the Tax Court is an Article I court, the “case or controversy” requirement under Article III applies to the exercise of our judicial power. See Battat v. Commissioner, 148 T.C. 32, 46 (2017) (citing cases). Accordingly, we will dismiss a case as moot if the parties’ subsequent actions have produced a situation in which neither party retains any “legally cognizable interest in the outcome.” City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000) (quoting Cty. of Los Angeles v. Davis, 440 U.S. 625, 631 (1979)). A case becomes moot when “the court can provide no effective remedy because a party has already ‘obtained all the relief that [it has] sought.’” Conservation Force, Inc. v. Jewell, 733 F.3d 1200, 1204 (D.C. Cir. 2013) (alteration in original) (quoting Monzillo v. Biller, 735 F.2d 1456, 1459 (D.C. Cir. 1984)).
In the case at hand, the IRS certified petitioners as persons owing a seriously delinquent tax debt. Petitioners, believing those certifications to be erroneous, petitioned this Court for review. The relief that they sought–and the relief that the statute authorizes us to grant, if we determine a certification to have been improper–is an order directing respondent to “notify the Secretary of State that such certification was erroneous.” Sec. 7345(e)(2). Here, the IRS has conceded that its certifications were erroneous because petitioners had submitted an offer-in-compromise of their 2012 tax liability, an offer that had been determined to be processable and remained pending.
Petitioners had already received the relief they requested from the Tax Court, removing any controversy from the proceeding.
Petitioners wanted to argue the merits and argue about the processing of their offer, but that is beyond the scope of what the Tax Court will consider in a passport case. It notes that if the IRS certifies their case again to the State Department, they, or at least Ms. Garcia, can come back to the Tax Court and argue at that time that the certification was erroneous.