Tax Court Grants De Novo Review in Passport Revocation Cases
In Garcia v. Comm., 164 T.C. No. 8 (2025), the Tax Court denied the IRS’s motion for summary judgment in a passport revocation case, ruling that unresolved factual issues prevented a determination that a taxpayer’s liabilities were “legally enforceable” under §7345. Alberto Garcia, Jr. challenged the IRS’s 2022 certification of his tax debts as “seriously delinquent” while the IRS relied on a 2014 default judgment obtained in district court to extend the collection statute for Garcia’s $130,000 in liabilities assessed initially between 2007 and 2010.
Garcia argued he was never served in the district court action, making the judgment void and the liabilities unenforceable due to the expiration of the standard 10-year collection statute of limitations period. The Tax Court agreed that whether Garcia was served is a material fact and found that if the default judgment is invalid, the liabilities may be unenforceable, making the certification invalid.
Notably, the court held that the review of IRS certifications under IRC §7345 should be de novo (not limited to the administrative record), allowing for a fresh review of all relevant legal and factual matters, including evidence introduced at trial.
Glen Frost’s Takeaways:
The Tax Court’s ruling in Garcia v. Comm. is a landmark decision, establishing that the court will review the facts of passport revocation cases de novo. This is a significant procedural victory that dramatically alters litigation strategy for these cases.
- A Full Second Chance: A de novo review means we are no longer limited to arguing that the IRS abused its discretion based on their own administrative file. We now get a completely fresh, new trial on the facts.
- New Evidence is Allowed: This opens the door to introducing new evidence and witness testimony. As in the Garcia case itself, we can now effectively challenge the core basis of the certification, such as whether the collection statute has expired.
- Increased Taxpayer Leverage: The threat of a full trial on the merits gives taxpayers tremendous leverage when negotiating with the IRS that did not exist under the previous, more deferential standard of review.
This ruling ensures that a taxpayer facing the drastic consequence of passport revocation will have a full and fair opportunity to challenge the government’s case on its merits.
