Franklin v. United States, 49 F.4th 429

Background

The IRS assessed $421,766 in penalties under 26 U.S.C. § 6677 against James Franklin for failing to report a foreign trust; the IRS filed a lien, levied Social Security benefits, and certified Franklin as having a "seriously delinquent tax debt" under the FAST Act, prompting passport revocation.
Franklin submitted a FOIA request for his administrative file and § 6677 penalty workpapers; the IRS produced some records that Franklin says show § 6751(b) supervisory approval was not obtained.
Relying on the FOIA production, Franklin submitted nominal offers-in-compromise and then sued instead of administratively appealing, alleging multiple causes of action (including claims under 26 U.S.C. §§ 7432, 7433, 7345, 28 U.S.C. § 2410, the APA, and a Fifth Amendment challenge to the FAST Act passport-revocation scheme).
The Government later attached additional exhibits to a dismissal motion that it said demonstrated supervisory approval under § 6751(b); Franklin amended to seek FOIA attorneys' fees based on that development.
The district court dismissed Franklin's § 6751(b)-based claims for lack of subject-matter jurisdiction as improper collateral attacks on tax assessment/collection, upheld the FAST Act passport-revocation scheme as constitutional, and denied FOIA attorneys' fees; Franklin appealed.
The Fifth Circuit affirmed in all respects.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Jurisdiction over § 6751(b)-based claims (damages, lien release, quiet title, etc.)	Franklin: IRS failed to satisfy § 6751(b) supervisory-approval requirement, so penalties are invalid ab initio and he may recover damages/release lien without paying first.	Government: Claims are collateral attacks on assessment/collection barred by the Anti-Injunction Act and sovereign immunity; no waiver.	Dismissed for lack of subject-matter jurisdiction — claims impermissibly challenge validity of tax assessment; taxpayer must follow statutory remedies (pay and refund suit).
Constitutionality of FAST Act passport-revocation scheme (substantive due process/right to international travel)	Franklin: Passport revocation denies a fundamental right to international travel and therefore triggers heightened scrutiny under the Fifth Amendment.	Government: Right to international travel is not fundamental; revocation is rationally (and at least substantially) related to the important government interest in collecting taxes.	Claim dismissed. Court held international travel is not a fundamental right; even under intermediate scrutiny the scheme is constitutional as tailored to recoup serious tax debts.
FOIA attorneys' fees entitlement	Franklin: He substantially prevailed because the lawsuit prompted disclosure of records and the Government's later filings revealed the withheld documents.	Government: Disclosure produced no public benefit; plaintiff sought information for private tax litigation; fee award is discretionary and unwarranted.	Affirmed denial of fees. Court found no public benefit, private commercial interest predominated, and district court did not abuse its discretion.

Key Cases Cited

Flora v. United States, 362 U.S. 145 (taxpayer must generally pay assessed tax and sue for refund rather than enjoin collection)
Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (courts should not enjoin tax assessment/collection absent narrow exceptions)
Direct Mktg. Ass'n v. Brohl, 575 U.S. 1 (distinguishing administrative steps in tax/reporting regimes)
CIC Servs., LLC v. IRS, 141 S. Ct. 1582 (limits on challenges to reporting requirements vs. assessments)
Kent v. Dulles, 357 U.S. 116 (early recognition of travel-related liberty interests)
Haig v. Agee, 453 U.S. 280 (distinguishing international travel from interstate travel and upholding passport revocation in national-security context)
Regan v. Wald, 468 U.S. 222 (clarifying limits on claims that international travel is equivalent to interstate travel)
Califano v. Aznavorian, 439 U.S. 170 (distinguishing international travel from the virtually unqualified right of interstate travel)
Craig v. Boren, 429 U.S. 190 (intermediate-scrutiny standard articulated)
Batton v. IRS, 718 F.3d 522 (standard of review and factors for FOIA fee awards)
Texas v. ICC, 935 F.2d 728 (evaluating public benefit factor in FOIA fee determinations)