Media for Commissioner v. "Americans United" Inc.Audio Transcription for Opinion Announcement - May 15, 1974 in Commissioner v. "Americans United" Inc.
Audio Transcription for Oral Argument - January 07, 1974 in Commissioner v. "Americans United" Inc.
Warren E. Burger:
We’ll hear arguments next in 72-1371, Alexander against “Americans United.”
Mr. Crampton, you may proceed whenever you’re ready.
Scott P. Crampton:
Mr. Chief Justice and may it please the Court.
The proceedings before Your Honor, is on a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.
All taxes are involved and the basic issue is a procedural one, namely, do the Anti-injunction Act and the Declaratory Judgment Act prevent the maintenance of this action for injunctive relief?
This in turn requires consideration of the structure which Congress has provided for the litigation of tax controversies namely, proceedings to the Tax Court and then on appeal or first payment of the tax and then a refund suit either in the District Court or in the Court of Claims.
And this tax procedure is expressly protected as we view it by the Anti-injunction Act and the Declaratory Judgment Act.
I realize that when you’re in a position of deferring judicial consideration of certain questions that is not a popular position to take, but it seems to us, it’s required by the laws and by the need of the United States to protect its revenues.
The case is before the Court on a complaint and a motion to dismiss.
The motion to dismiss was sustained by the District Court and then reversed in part by the Circuit Court.
The respondent, Americans United is a nonprofit educational corporation organized in 1948 under the laws of the District of Columbia.
Its purpose as stated in its charter is to defend and maintain religious liberty in the United States by the dissemination of knowledge concerning the constitutional principle of the separation of church and State.
In 1950, Americans United asked the Internal Revenue Service for a determination that it was exempt from tax under comparable provisions to what is now effective in the Internal Revenue Code as Section 501 (c) (3).
The Revenue Act of 1954 in three sections provides for charitable deductible gifts.
One is 501 (c) (3) and then the actual deductions allowed in 170 (c) (2) and then 2055 (a) (2), the latter being the estate tax cases.
Each of this provisions limits a charitable deductible gift to an organization and I’m quoting, “No substantial part of the activities of which is carrying on propaganda or otherwise attempting to influence legislation, with minor exceptions no deduction is allowed to taxpayers for political contributions” and it seems to us that this quoted provision on the exempt organization simply carries out this general policy.
It may help the Court know the procedure that is followed in these cases.
An organization claiming to be exempt files with the Internal Revenue Service a Treasury Department Form 1023 which discloses considerable information about its organization and its form and the pertinent documents, whether it’s a successor to another corporation, a description of its activities, any financial information that it may have or financial information of predecessor, and it must show that there will be no return of assets to the organizers, a sort of built-in side principle.
If there are any problems arising after this is filed, as far as the Internal Revenue is concerned, there are opportunities for conference and the Internal Revenue Service is quite willing to discuss the situation with the organization, and tell them in what particulars they do not believe it complies and ultimately they frequently, generally work the situation out.
If the Internal Revenue Service is satisfied, it issues a ruling letter to the exempt organization saying that it finds that it has qualified under the statute.
The Internal Revenue Service of course reserves the right to look at the operation and the function of the organization in later years to see that it is operating as it represented it would and furthermore that there’s been no change in the situations that might require a further review of the matter.
This Court some years ago had a situation in the American Automobile Association cases where there was a revocation of a ruling that had been outstanding.
As far as the exempt organizations are concerned, there were 13,000 of these ruling letters issued in the last fiscal year.
If the 13 -- if that number of exempt organizations, how is it possible for the Service to keep track of what each one does from year-to-year and as you point out sometimes withdraw the exemption?
Is that -- do informers bring this to your attention or what?
Scott P. Crampton:
I imagine some of it may be brought to our attention by other people bringing actions to withdraw the tax exempt status.
We have a number of those cases and of course, I suppose, informers do question.
Now, this is one of our complaints with these procedure is that I think outsiders use the Internal Revenue Provisions as sort of a club to accomplish, a purpose that they disagree with them and to a certain extent, the Service does from time-to-time examine this.
It's -- I suppose they have the same problem in determining --
Annual reports are not required, are they?