*1 ALEXANDER, OF COMMISSIONER INTERNAL UNITED” INC.
REVENUE “AMERICANS Argued January 7, May 15, No. 72-1371. 1974 Decided *2 J., opinion Court, delivered the Powell, Burger, which J., Rehnquist, C. Brennan, Stewart, Marshall, White, JJ., joined. Blackmun, post, J., dissenting opinion, p. 763. filed a J., part took Douglas, no the decision of the case.
Assistant Attorney Crampton argued General the cause petitioner. Solicitor him With on the briefs were Bork, Smith, General Richard Stone, B. Stúart A. Ernest Brown, J. Wiprud, Henzke, Grant W. and Leonard Jr. J.
Alan B. Franklin Morrison Salisbury argued C. cause and filed a brief for respondent.* urging *Briefs of amici curiae by affirmance were filed H. David Rosenbloom, Harry Rubin, J. Myers, Rabinove, John Holt Samuel Caplin and Mortimer M. for the Foundations, Inc., Council on by Analysts Thomas F. Field for Tax and Advocates. opinion Mr. delivered Justice Powell Court. orga- corporation
Respondent educational nonprofit, as nized under of-the District of Columbia the laws “Prot- Separation estants and Other Americans United Church Its main- and State.” to defend and religious liberty tain the United the dis- States knowledge semination of the constitutional concerning principle separation In 1950, of church and State. the Internal ruling Revenue Service issued a letter that respondent qualified tax-exempt under predecessor provision Internal (the Revenue Code of' 1954 Code), (c) 26 U. §C. 501 (3).1 result, As a the Service treated contributions respondent as charitable deductions under the predeces- provision (c) *3 sor of (2) 170 Code, § of the 26 U. C. S. (c)(2).2 170 § This situation unchanged continued until predecessor 1 The provision (c)(3) of was-§101(6) Code §501 of the (c) Internal Revenue Code of (3) 1939. Section 501 describes following organizations exempt as from by- federal income taxes (a): virtue of 501§ “Corporations, any, and community chest, fund, foundation, or organized operated and exclusively religion’s, charitable, for scientific, testing public safety, literary, for purposes, or educational or for the prevention cruelty of to animals, children part or no of net earn- ings of which to any private inures benefit of shareholder or individual, no part substantial of the carrying activities of which is propaganda, on or otherwise attempting, to influence legislation, and which participate in, does not or (includifig intervene in publish- ing distributing or statements), any political of campaign on behalf any of candidate for public office.” f predecessor The provision (c) (2) o of ther § Code was (o) (2) of the § Internal Revenue Code of 1939. Section 170 (c)(2) defines a “charitable contribution” for purposes (a), of 170 deduction; provision, charitable to mean a gift contribution or to or for the use of:. “A corporation, trust, community or chest, fund, or foundation— ruling letter issued 1969, when the Service April respondent ruling ground on the the 1950 revoking devot (c)(3) (c)(2)(D) and 170 §§ had.violated attempts of its activities part ing a substantial is thereafter, the Service legislation. Shortly influence from respondent exempting ruling sued another letter under welfare1’ income taxation as a “social effect (c) (4) (4), (c) 26 U. S. C. 501 .3 Code 501§ liable change respondent was to render of this status under Code (FUTA) for taxes unemployment destroy tax- 3301,4 eligibility §C. for 26 U. and contributions under § deductible
“(A) organized any posses- or in the or in created United States thereof, State, States, any or under law of sion the United n or'any States; Columbia, possession the United District of “(B) charitable; organized exclusively religious, operated scientific, literary, purposes prevention or for the or educational cruelty animals; children or “(C) part earnings no of the net of which inures to benefit any private individual; shareholder or “(D) part carrying no substantial of which is activities propaganda, on or attempting, legislation, otherwise to influence in, participate which not (including does or publish- intervene in ing distributing or statements), .any political campaign behalf any public candidate for office.” requirements The differences (c)(3) between the §§501 are minor and are not litigation. involved (e)(4) Section 501 the following organizations qualifying lists under the exemption from federal income taxes: leagues “Civic organizations . organized profit but *4 operated exclusively promotion for the welfare, of social or local associations of employees, the membership of which is limited to n employees of designated person persons or particular in a municipality,- and earnings the net of- exclusively which are devoted charitable, educátional, or purposes.” recreational 4 See Code (c)(8), 26 (c)(8). §3306 U. S. Respondent C. §3306 began paying' FUTA February taxes in 1970 and has stated its will ingness to continue to light do so relatively in of its insubstantial de caused a substantial ruling letter
Because the of its respondent and two contributions, in its crease United instant action in initiated the benefactors for the District Columbia District Court States declaratory judgment July 30, They 1970.5 sought lobbying pro administration that Service’s (c)(3) and 170 was erroneous scriptions §§501 injunctive rein- requiring relief unconstitutional6 respondent liability paid reports that for such taxes. Service year Í969, $1,052.60 $981.13 in FUTA taxes for the for $1,131.36 $889.09 Brief for for 1972. Petitioner n. Ordinarily, (c)(3) respondent’s shift from status §501 §501 (c)(4) subject would status also have meant that it would become security (FICA) (c) (3) taxes, to federal social since 501§ exempt (c) (4) organizations organiza- from such taxes but 501§ (b) (8) (B), (b) (8) (B). are not. Code 3121 tions 26 U. C. 3121 § here’, This however, respondent distinction not involved because ’ years prior voluntarily pay although elected to FICA taxes (c) (3) it held status. This election had been effect more eight years, respondent incapable than which rendered of terminat- ing pay its election to FICA taxes even if it had retained its (c)(3) status. (k)(l)(D), Code §501 S. C. §3121 U. (k)(l)(D). jurisdiction, 5 Federal was founded on 28 U. S. C. §§1331 Act, 1340 and on 10 of the Procedure Administrative now U.5 S. C. 701-706. §§ complaint 6 The amended (1) identified five claims: lobbying proscriptions (c) (2) (D) and 170 §§ Service’s administration of them were unconstitutional due to the imposed restrictions on the rights exercise of First Amendment political advocacy by respondent (2) contributors; and its part” “substantial provisions test equal these protection denied laws conflict with the Due Process Clause of Fifth Amendment, by allowing large tax-exempt organizations engage greater quantum in a of lobbying activity than is. allowed to smaller (3) organizations; disparity in the absolute amounts of lobbying activity large allowed (c) (3) organizations and small 501§ large enabled certain engage churches to lobbying in more in favor of government aid to church respondent schools than bring could
757 (c)(3) letter. ruling respondent’s § 501 statement included action objections to the Service’s Because their of federal statu constitutionality challenge to the facial three-judge convening of a tes,7 requested the also they § to 28 U. S. C. pursuant court district action, principally moved to dismiss the The Service Declaratory in the exception ground on the 8 taxes,” Federal respect for cases “with Judgment Act Act Anti-Injunction against in the and the_prohibition purpose restraining “for the assessment suits subject- any tax,”9 collection of ousted the court rights opposition, thereby violating plaintiffs’ under the bear in Amendment; and Free Exercise Clauses of First Establishment (4) statutory part” “propa- that the standards and of “substantial ganda” lacking they specificity were so constituted an invalid delegation legislative Service; (5) power to the and that the Serv- arbitrarEy capriciously revoking respondent’s ice acted and 501§ (c)(3) exemption. apparently The last two contentions were not advanced in Appeals. argument the Court of There the centered the.“discriminatory” aspects part” of the “substantial test identi- fied above as claim respondent Specifically, coplaintiffs sought and its to have the exemption clauses of severed from the remainder cf § that section and declared unconstitutional. exception The federal tax Declaratory Judgment to the Act .appears in 28 U. S. C. 2201: controversy “In a jurisdiction, except case of actual within its respect taxes, to Federal any States, upon court of thé United filing appropriate pleading, may of an rights, -declare the and other legal any party relations of seeking declaration, interested such whether or sought. Any not relief is or could bé such declaration shall have the force and judgment effect of a final or decree and shall be (Emphasis added.) reviewable as such.” Anti-Injunction (Income Assessment) Act Tax forth in set (a), Code 7421. (a): 26 U. S. C. 7421 “Except provided (a) (c), sections 6212 (a), (b)(1), suit for no restraining assessment or collectiоn any tax shall be any maintained in court accepted Court The District jurisdiction.
matter court, three-judge refused convene argument, *6 filed unpublished in an order complaint dismissed the Appeals Court 9, 1971. The United' States March dis the affirmed of Columbia for the District Circuit plaintiffs, pertained individual insofar the missal as it and remanded the case respondent but it reversed as to a to convene to the District Court instructions three-judge “Americans United” Inc. v. court. Walters App. F. The 284, (1973). 155 U. S. C. 477 2d 1169 D. petitioned review, granted Service and. we certiorari. U. S. We reverse. Simon, opinion ante, In our University in Bob Jones p. 725, Anti-Injunction we the examined meaning'of and interpretation Act opinions Court, of this prior and we our two-part reaffirmed adherence test announced in Packing Navigation Enochs v. Williams & Co., 370 U. 1 (1962). S. reiterate, the Court To Williams Packing únanimously held that pre-enforce- injunction ment against assessment or collection of the. may taxes be granted only “if (i) it is clear that under no circumstances could ultimately pre- Government id., . . vail . 7; (ii) at equity jurisdiction “if other- wise met, exists.” Ibid. Unless' both conditions preventive suit for injunctive reliеf must be dismissed.
In the instant case the of Appeals-recognized Court Williams Packing as precedent responds controlling ent’s coplaintiffs individual and affirmed the dismissal of the súit as to them. 155 U. App. D. 292, at C., F. 2d, at 1177. The court held that the relief requested by the, plaintiffs individual “relate directly to [d] the assess- ment collection of taxes” and that allegations .by any person, -whether, or not person such person is the against' whom such tax was assessed.”- None of exceptions is relevant to this case. no avail” rights “to were of constitutional
infringements (a). Id.; 291, at barrier of overcoming respondent recognized that The court also 2d, F. at 1176. id., Packing at Williams criteria, satisfy could not suit respondent’s 2d, but concluded that F. Act Anti-Injunction scope was without Packing subject to the Williams test.10 therefore. not respondent regard conclusion with court’s One was rested on the confluence of several factors. As the respondent’s nature of cláims. constitutional is not respondent’s argument court the thrust of noted, for a under ex qualifies (c) (3) exemption 501§ provision’s rather isting law but “substantial part” influence proscription efforts against test *7 Id., F. at legislation 2d, are unconstitutional. at 477 293, Obviously, been 1178. this could have observation not dispositive to does the Court of factor Appeals, this sue, differentiate respondent, which was allowed to from the individual con who coplaintiffs, pressed likewise claims but who were action. dismissed from the stitutional , Furthermore, of decisions Court make unmistak ably clear the taxpayer’s constitutional nature of a claim, as from distinct of probability success, is of no consequence Anti-Injunction g., under the E. Act. 10 Appeals The Court “except of also scope held that the the of respect to Federal taxes” Declaratory Judgment clause Act, 8,' supra, see n. Anti-Injunction with the coterminous Act against ban “for purpose suits the restraining or assessment any tax” despite collection of phrasing the broader the former provision. App. 284, 291, 1169, 155 U. S. D. C. F. 2d position we issue, While take no any on this it is in clear that event exception Declaratory federal tax Judgment to thе Act is at prohibition least as broad as Anti-Injunction Act. Be cause we hold that latter suit, Act bars the instant there is no separately occasion deal with the former. See Bob Jones Uni versity Simon, ante, v. at 732-733, n. 7. Dodge Osborn, v.
Bailey George, (1922); 259 U. S.
titlement to that injury, only'a irreparable however, statemént of This, relief, injunctive prerequisite.for which is the essential part one only under equitable traditionál standards ante, Jones, Packing Bob of Williams As test. noted injunctive on of this 745-746, allowing at relief the basis showing (a), quite meaningless. alone would render 7421 §
If, on
hand,
the other
the court’s
about the
comments
are
inadequacy of a refund action for FUTA taxes
.interpreted
respondent
op
that
an
to mean
lacks
portunity
finally
to have its
adjudicated by
claims
a
they
law,
court of
we think
Respond
inaccurate.
liability
ent’s
hinges
FUTA taxes
on precisely
-
the same legal
issue as
its
for tax-
eligibility
does
deductible
170, namely
contributions under §
entitle
ment to
501 (c)(3)
respondént
status. And
have
will
a full opportunity
litigate
legality
of the Service’s
respondent’s
withdrawal of
(c)(3)
§501
ruling letter
a refund suit following
payment
of FUTA taxes.
g.,E.
Christian Echoes
Ministry,
National
Inc. v. United
States, 470
(CA10
F. 2d 849
cert.
1972),
414 U. S.
denied,
(1973).13
respondent
That
voluntarily
has
paid FUTA taxes
rather
challenging
imposition
than
their
via
refund suit does not alter
taxpayer
conclusion. A
cannot
pro
render an available review
cedure
inadequate
an
remedy
law
voluntarily
forgoing it.
Pont,
See Graham v. Du
7G3 no valid reasons that there are therefore conclude We *10 Packing pur- from Williams for distinguish this case from (a) exempt respondent’s or to' suit poses §of in case.14 The requirements the dual enunciated judgment is reversed. ordered.
It is so Douglas Mr. in part took no the decision of Justice this case.
Mr. Justice Blackmun, dissenting.
Finding myself in solitary case, dissent in this “tax” I am somewhat expressing contrary diffident about views I apparently easily. to those Court has so reached I only so disturbingly do because am aware of the overwhelming power of the Internal Revenue Service. power This is such that its mere exercise often freezes philan-° so as to endanger. tax status the existence of they thropic organizations public secure, benefits merely path judicial dis- because the review is so -long expensive. I couragingly primarily, write there- I fore, express what feel is needed a. caution word governmental power challenge about where the means to (cid:127) power are unfavorable and unsatisfactory at best. appropriate litigating collection of that tax is an vehicle the" legality (c)(3). of the Service’s actions iinder As noted §501 ante, Bob 22, range at 748 n. not decide now the Jonesl we.need available, suit, which,- suit, remedies in such refund unlike this brought pursuant procedures. to congressiónalfy authorized reading by think our compelled language of 7421 We apparent congressional purpose uf this The conse statute. quences regime (c)(3) present organizations can §’501 Mr, indeed, Justice Blackmun be ably harsh articulates his Jones, ante, As we noted in Bob dissenting'opinion today. 749-750, may subject meriting well be a congressional consideration.
76é
I of Colum- (AU) Inc. is a District United” “Americans nonprofit corporation organized bia educational formally recognized For years almost AU was exempt Service from federal income tax under as. of the Internal Revenue Code of IT. S. C. (c)(3),1 In- predecessor, (6) and its ternal Code of 1939. Revenue April 25, however,
On In- Commissioner of ternal exemption Revenue revoked AU’s letter-ruling ground longer -no met the' requirements (c) (3) and, instead, §of 501 was an “action” organization, within the Treasury Regula- definition of *11 tions (c)(3)-! (с)(3)(i) §§ 1.501 (iv)^, and in that a part substantial of its activities was devoted to pur- objectives suit of to influence legislation App. 7-10. The (c) (3) of its 501- status, § loss however; did not result 1 exemption ruling, (6) AU’s under 101 of Code, the 1939 was § July 3, issued 1950. pertinent part Section 501 reads as follows: tax-, Exemption from corporations, trusts, oh certain “§ etc. “(a) Exemption from taxation. organization, “An (c) described in subsection exempt . .. shall be
from taxation under this subtitle exemption unless such is denied under section 502 or 503.
“(c) exempt List of organizations. following organizations
“The (a): are"*referred to in subjection “(3)-.Corporations, any foundation, community chest,’fund, or organized operated exclusively religious, scientific, charitable, for testing public safety, for literary, purposes, or or for educational prevention cruelty animals, to children or part no of the net earnings of which any inures to private the benefit of shareholder individual, or no part carry- substantial of. activities of which is ing propaganda, or attempting, legislation, otherwise to influence and which does not participate in, or (including intervene in publishing distributing or statements), any political campaign on any behalf of candidate public for office.”
765 becoming subject AU’s to income federal tax. This league AU or qualified was because as a civic other prga- which 501 has -application.2 § hization to result, nevertheless, distinctly was adverse to AU respects. A contribution to the no two deductible-by §§170(a)(l) was under longer the donor (c)(2)(D) Code, of the 1954 C. §§170 U. S.. (a)(1) par closely the latter of which (c)(2)(D), (c) (3). allels but not identical a matter § As concern, subject much less AU also became federal unemployment Code, § tax under 26 U. C. S. exemption § organizátions therefrom for (c)(3). limited to under §-501 those qualify (c) (8) of Code,'26 (c)'(8).3 § 3306 the 1954 U. C'. paid federal unemployment AU has taxes,4' and has stipulated that it continue to will do so. (c)(4)
2 Section 501 relates to: “(4) leagues organizations organized profit Civic but operated éxelusively promotion welfare, of social or local .for.-the employees, membership associations of thé which is limited employeеs the- designated person persons particular of a -or in a municipality, earnings exclusively and the net of which devoted charitable, educational, purposes.” or recreational 3Although, (b) (8) (B) Code, under the 1954 C. U. S. (b)(8)(B), required imposed was not pay AU §3121 Federal long exempt Insurance Act it so as was under Contributions so, privilege had elected to do (c)(3), was its under *12 (k)(l)(A),-26 (k)(l)(A). U. C. §3121 S. Termination §3121 .of (cid:127) this accepted responsibility requires years’ for tax two advance .written notice- and cannot be effected at all after an subjected years .has been eight 'the-tax (k) or more. '§3121 (1) (D), 26 U. (k)(1)(D). C.S. AU been so taxed has for eight years. Thus,, more than it is responsi-. terminate its u.nable'to bility for tax under the FICA even- if it were to as continue a. (cid:127) (c) (3) organization. 501§ 4 paid-$981.13 AU unemployment 1969; federal $1,052.60 tax for ' (cid:127) 1970; $889.09 for 1971; $1,131.36 Brief fori .2, Petitioner 4 n. 766 (c)(3) status, 501§its of the revocation
As a result so sharply that declined to AU by donors contributions to raise not able organization was for the first time the of its AU two expenses. enough to cover funds They suit.5 by present relief the sought then benefactors 501 substantiality §§ test alleged have that the disparity unconstitutional 170.(c)(2)(D) created an Com- that the large organizations; and small between ruling punitively; exemption revoked missioner AU's 5 injunc- requested declaratory complaint both The amended however, .fully adequate latter, and a The would be tive' relief. Accordingly, declaratory judgment, such, not be needed. would' as Anti-Injunction. only, applicability the I am with the concerned (a). Act, Code, 26 C. 7421 7421 U. S. § Declaratory Judgment the The Commissioner has asserted jurisdictional Act, 2201-2202, provides a barrier 28 also S. C. U. §§ by phrase, general applicability limited suit because its i.s reaching the “except respect not taxes.” While to Federal companion question, in the agree I with the Court’s observation would Simon, ante, 732-733, 7, University n. case, v. Jones Bob questions scope 2201 and as to whether exist as to the of § (a). coterminous with sovereign the doctrine of Commissioner also asserts that The action; agree. suit, immunity I do present bars noted, App. 284, 295, 477 Appeals D. C. F. Court of 155 U. immunity 1169, exceptions 1180, 2d enun falls within doctrine’s (1963): “(1) Dugan Rank, ciаted in v. 621-622 action U. S. (2) though beyond powers-and statutory officers their even within scope authority, manner in powers of their themselves .or claim, they constitutionally Here, are exercised are which void.” unconstitutional, (c)(3) is made that and that the Commis sioner administers the section in an unconstitutional manner. Connolly, (DC Supp. 1971), v. 330 F. the court In Green (cid:127) granted against Treasury comparable sought officials relief to that sovereign immunity jurisdic here. Inasmuch-as the defense of is. tional, Sherwood, 312 (1941), United States v. U. S. summary, Court’s affirmance of the Green case sub nom. Coit Green, (1971), affords pertinent precedent. S.U. *13 penalize it was unconstitutional First Amendment to. activity manner; (c) (3)’s “sub- stantial” and “propaganda” standards were unconstitu- tionally vague. sought AU on the reinstatement IBS Organizations Cumulative List of so that contributions it to would be (a)(1) deductible donors under §§ and (c)(2)(D).
II Anti-Injunction Act, § 7421 of the Code, § U. in part: (a), C. reads ,“[N]o purpose restraining suit of. any
assessment collection of be main- tax shall tained in any by any person, court or not whether person such the persоn against such whom tax was assessed.”
In considering two-step analysis is neces- (a), sary: (1) apply? (2) When does the statute When is applicable, exception under what circumstances is an permitted? It seems to me that overlooks Court the first question in apply mechanically order to exception criteria for an (a). of 7421 application The threshold question, obviously, pres- is whether the ent litigation is restraining” a “suit purpose for the any tax. It is. conceded that AU has no income lia- tax bility. and will have none regardless the outcome this litigation. AU has paid,, . and will pay, continue to unemployment federal taxes. Its Assumption of FICA liability is frozen and cannot now be terminated. It is in the context this fixed and certain as status to all these federal income, unemployment, taxes — purpose” FICA —that “the of the present litigation, within meaning of 7421 (a), must be ascertained. AU. asserts that the is to determine its charitable so status far benefactors are concerned. Indeed, one *14 import of the literal within surely that, concede must purposе one “for the suit is not words, the the statute’s instead, suit to is, It a any . . tax.” restraining . utilized sus-' of contributions continuance assure the operations. AU’s tain sim- Congress, however, so
I attribute would not orga- an (a) in 7421 as to enable plistic prohibition statutory sub- the barrier circumvent nization to injunc- an purpose for which jective protestation intent, legislative In order to ascertain sought. tion purpose effect well as nepessary to consider as it is analysis. objective criteriá See bring thús into the 1502, 73 Col. 1508-1510 Development, Recent L. Rev. ' In Connolly, Bob Jones 2d University v. 472 F. 906 (1973), the Fourth concluded when the Circuit exemption withdrawal of ultimately an result “would potentially greater revenues,” tax thé obvious enjoin of a prevent suit to is.to the withdrawal assess ment tax, and 7421 applicable. Thus, would be “purpose” equated was with ultimate effect. Cre tax County Private School Connally, nshaw Foundation (CA5 2d pet. F. 1973), pending for cert. No. 73-170, has a similar In present focus. ease the Court Appeals took a approach: different
“The upon restraint assessment and collection is. at best a effect of action, collateral the primary design not being to remove the burden of taxation from presently those contributing but rathu to avoid' disposition contributed away funds from .of the. corporation.”
155 U. S. App. C. 284, D. 293-294, 1169, 1178-1179. F. 2d In. view, applicability of the statute depends on the direct effect the relief sought would have plain- on the tiff and not on--the system as a whole.
n injunction sought noted, been the result of As has directly from inhibit collection here would highly speculative effect, AU. what collateral It is'also any all, possibly if suit could have federal on If have revenue. the assertion that AU’s contributions I I .accepted, be, dried be must up suspect to. found presume would that its erstwhile contributors have objects is, organiza- other that' other their bounty, im- vitally tions whose names remain on the Service’s portant pos- nothing Cumulative List. When more than sible involved, collateral effect the revenues is wide-ranging applicability (a), (cid:127)§ Court’s test *15 is, announced too today, too attenuated and me, encompassed removеd to be within the intendment purpose statute’s “for the phrase, restraining assessment or collection any tax.”
In
Co.,
Enochs v. Williams Packing Navigation
&
S. 1 (1962),
U.
this Court
object
observed that
(a)
jurisdiction
“is to withdraw
from
. .
.
courts to entertain
seeking injunctions
suits
prohibiting
the collection of
taxes,”
federal
permit
and “to
United States to
alleged'to
assess and collect taxes
be
due
judicial
without
intervention,
require
and to
the legal right to
disputed
sums be
in a
determined
Id.,
suit for refund.”
at 5 and 7. There undoubtedly,
is appropriate concern about the underlying danger “that
a multitude
spurious
of-
suits, or even of suits withj^os
merit,
sible
would
interrupt
so
the/free flow oi>reveñues
jeopardize
as-to
the Nation’s
stability. See,
g.,
fiscal
e.
State
Cases,
Railroad Tax
U.
613-614
(1876); Cheatham v.
States,
United
may contribute speculative only minor and bеst, is, at deduction therefore,' would I, controlling. nor neither significant, to component plaintiff” as on the accept “direct effect “purpose” true of the ascertainment be considered in the 7421.(a). reach of meaning and of the within the suit, Pack- Williams disapproval I do not to indicate wish enjoin the collection ing'. taxpayer sought' There a jurisdiction, it as- equitable As the basis faxes. bankruptcy if it thrown into it serted would.be challenged. The Court required pay were the taxes that, carefully there be where may. noted well situations . . inapplicable “the central of the Act is . attempted may enjoined.” S., collection be 370 U. sure, narrowly exceptions at 7. To be the Court confined plaintiff instances where the would irreparable suffer injury where it “clear that was under no ultimately circumstances could the Government prevail.” Ibid. If, however, this test met, then the purpose” “manifest permit statute —to the collec- tion of judicial taxes without “inap- intervention^—is plicable.” The made thus it .clear Court that there was element, an in addition to the traditional equity consid- erations, spelled previously out in Miller v. Standard Nut *16 Co., Margarine 284 U. S. (1932), presr must be that 498 ent in order proscription to avoid the of the Anti- Injunction Act.' Packing,
Williams of course, facts, is clearly’ distinguishable from this There purpose of case. the the directly to restrain the collection was of social suit security unemployment allegedly taxes past due taxpayer. from Here the avowed purpose is not restrain, collection tax to to assure but ATI’s restoration to the In List. Packing Williams Cumulative was the incidence of taxation that was challenged and the ir-
771 reparable injury prospective of of payment the tax was claimed the equitable injunction. as basis for the Noth- remotely ing resembling present is here. To read Packing Williams broadly-as today as the Court does is (a) 7421 § make more restrictive than the Court in ' Packing Williams Congress or intended. The result . (a) becomes an any absolute bar to all injunctions, irrespective liability, purpose of tax effect of the suit, the or of character of the Service’s action. Arguably,
There is a further
consideration.
where
challenged
governmental
is not one intended to
action
produce
but, rather, is one
a broad-
accomplish
revenue
policy objective through
based
the medium of fedéral
taxation,
application
of 7421
is inappropriate.6
approach.
v.
Some courts have endorsed this
In McGlotten
Connolly,
(DC
among
Supp.
1972),
enjoin,
338 F.
suit
things,
exempt
organizations
"other
the continuation
status
membership,
Judge Bazelon,
that excluded
nonwhites from
Chief
writing
three-judge
Court,
District
stated:
nothing
“Plaintiff’s action
has
do with
collection or'assess-
ment,
tax,
He
taxes.
not contest the amount of his
does
own
nor
does he seek to
limit the amount
tax revenue collectible
n present case,
United
In
purpose
States.
...
central
clearly
inapplicable.”
Id.,
(footnotes
[of
at 453-454
statute]
omitted).
Connolly,
See
Green
Supp.
(DC),
also
v.
per
330 F.
aff’d
curiam
sub
Green,
(1971),
nom. Coit
three-judge
v.
Obviously, truly- of existence to. assure rather, is' the purpose, Its the the continuation philanthropic organizations and bestow.8 they public important benefits a Sonzinsky v. measure. revenue opposed to regulatory tax Bailey v. relies on States, The Court United 300 U. S. , the collec (1922), principle that even George, for the U. S. enjoined. these situa All tax cannot be tion of an unconstitutional Packing Williams tions, however, common with have a factor in tha; to restrain does not pfesent suit: from seek absent AU ofrollecting any owes. tax act Government’s spoke to in remarks Commissioner Alexander this effect (cid:127) Society in New Orleans Executives the American Association August 29, 1973: organization recоgnizes exempt provisions of the
“The IRS that the light special law must be of their interpreted and administered purpose raise place «oí to is, and their tax law.. .Their They Rather, guardian. they designed-to revenue. act as .in put approved uses exempt will sure that assets be .to contemplated application for' an extraor in the law.. Their callsv dinary Daily Report, Aug. degree-of Tax and-judgment.” care BNA . 30, 1973, p. J- 1 philanthropic must- be balanced organizations- value against objectives revenue-raising tax laws. Some . weighed to be in the iH this balance are reflected factors Treasury Department Report on Private Foundations: organizations char- philanthropic possess important “Private can They may. necessarily government acteristics which modern lacks. tq many-centered, subject, superstructure,- be free of administrative readily widely diversified exercised with individuals control ' give organizations and Such' characteristics interests. these views great action, opportunity thought experiment to’initiate and ventures, prevailing attitudes, untried new and to dissent from quickly flexibly. Precisely they to act can be initiated because single person group, they may á controlled or a' small great intensity energy. evoke of interest and dedication of These . n themselves, values, justify exemptions deductions for) provides activity'.' which philanthropic the law ' significant play part “Private philan- foundations in the work While, thropy. relatively development, -foundation is a modern *18 deserving.consideration factor very1'important Another Commis the vesting in is the hazard in this context philanthropic power-over virtual'plenipotentiary sioner that question can be little Although there organizations. Code, the. under Commissioner, o.f .the with,broad powers U. vested (a), properly S. C. regulations for the needful rules and “prescribe all in .the nothing, there is laws, enforcement” of the tax fully he be insulated! from suggests Code that must challenge effectuating policy. when social - pursuant charged AU has unconstitutional treatment pe- provision. to an unconstitutional These claims «re culiarly within the the province, of courts and opinion' Executive’s administrative The Court’s officers. : precluded a makes clear that claim this kind is now judicial from determination until such time Court concludes ultimately pre- Government could not vail on the merits. Unless' until that conclusion is reached, the philanthropic organization is at mercy -the of the Commissioner period for the usually a time — trust, its predecessor, vintage. antecedent, has ancient Like its permits special the foundation a donor to commit to uses the funds gives charity..... he ways, which In these have foundations enriched strengthened pluralism of our social order. arid',, preserved
“Private foundations fluidity provided have also impetus change for within the philanthropy. structure of American work, Operating organizations charitable tend to establish and within patterns. . foundations, defined . . private The assets of on the hand, frequently other specific operating free of commitment to programs projects; and that permits freedom relative foundations ease in the shift of their focus of support interest and their financial from one charitable area to assisted, another. New ventures can be new areas explored, new concepts developed, new causes'advanced. unique Because of its flexibility, then, private foundation can powerful constitute a evolution, instrument growth, iiriprove- ment shape charity.”- and direction of Senate Committee Finance, Cong., Sess., (Comm. 89th 1965). 1st 12-13 Print filed and claim to be a one —it takes substantial process adjudicative way work its through even And myriad pitfalls. with its refund suit guise a tax has only if possible route is III, Part paid.9 See that has been infra. ante, 729-730, University, Bob. Jones
The Court List is on the Cumulative “appearance acknowledges char- raising for most fund prerequisite to successful exemption program of organizations.” itable pro- licensing ato letter.ruling, therefore; is tantamount were limited authority If cedure. the Commissioner’s *19 (c)(3)’s require-: 501 by statutory § a clear definition of defini- objective part/’ by ment an of “no substantial be less concern is there would “charitable,” tion what But' where the possible. about administrative abuse.10 appears philanthropic organization concerned, there is power be unfettered little circumscribe the almost may the very long Commissioner.11 This be well so 9 majority organizations states that the Commissioner exempt (c) (3) operate 501 at a that income under loss no tax so § liability exemptions if their Bob Jones would result were revoked. University Simon, for Brief Petitioner n. 22. noted, As has been one of claims is that “substantial” AU’s (c) (3), employed in “propaganda,” and these words áre as are § clear, unconstitutionally objective vague. by are no There criteria respect which the draws Commissioner conclusions to these his Moreover, by, terms. the revocation is arrived at solely by (c) construing language (3), Commissioner not of 501§ by assertion, (a)(1) but his that section and §§170 ¿materia. (c)(2)(E) pari Thus, idiosyncrasies are- (a)(1) engrafted'upon, word “charitable” in 170 are entwined with, “organized operated exclusively religious, chari (cid:127) purposes” (c)(3). table . .or educatiоnal standard of This §501 the, by compelled product statute, is nowhere but of the Com discretionary application interpretation. missionex’s University, ante, In Jones suggests, the Court Bob an; long good-faith so as action of the Service reSeets “a effort to
775- policy of social brand particular to the one subscribes as time advocating at the be happens Commissioner attempt I nio make which merits of policy (a social the. should our tax laws application evaluate), but tQ policy social Surely, fickle a fashion. operate so concern. legislative is a matter for instance in the first reposed in extent these To the determinations should Service, they Internal Revenue authority by provided- balances of checks and 'system have the that, years has judicial organization review an before ruling imperiled exemption been with an favored on the change direction allegedly an unconstitutional of- part of the Service. on- the appeared
When ah which has enjoin Cumulative List seeks what it сlaims is illegal removal from that List and has no direct income de minimis liability liability, or a collateral my injunction, view, pro- should not be within the (a). hibition of I
Concluding, is not a bar to have, injunction by an AU, equitable the traditional considera- laws,” enforce the technical reo presence the tax s'-ements *20 a Anti-Injunction collateral motive does render Act inapplicable. perceive just I good-faith inquiry do not where the certainly is made. It is not made at the determination {whether doubtful, a suit restraining is for the taxes. is It that determining it is made in any whether there are circumstances under may ultimately which the prevail Government on the merits. More- over, me, question there" is a distinct meaning as to the phrase, good-faith Court’s “a effort to enforce the technical require7 ments of the tax laws.” Is effectuating innovation in policy social good-faith effort requirements? to enforce technical Is a threat university’s a, to revoke exemption ruling good made in faith when it proposition rests on the that the institution comply does not government-approved admission standards? injury adequate alternative irreparable
tions of is injunctive relief remedy whether must determine inquiry independent an appropriate. This is applies, Act Anti-Injunction question whether the injunctive when inquiry no as to is different from field. See, relief outside the tax appropriate Co., Wycoff Comm’n v. Public Service U. example, Westover, Inc. v. 237, Beacon (1952); Theatres, 240-241 vigorous (1959). 359 U. S. 506-507 AU makes pressing- irreparably claim it and will be that injured no by the since loss contributions donors longer an deduction, receive income tax ultimately completely loss is even unrecoverable were AU ante, prevail opinion, the merits. The Court its accept irreparable injury 761-762, at seems to the fact of just the Court of here, Appeals presence as recognized virtually App. inevitable. C., U. S. D. F. 2d, at 1177. Even where it been has found suit, bars a recognized has been that revocation exempt irreparable status is an injury sat that otherwise isfies the condition for the granting injunctive relief. See, for example, Bob Jones Univеrsity Connally, F. at 906. 2d,
In addition
irreparable
plaintiff
injury,
must
has,
show
he.
adequate remedy at law. Wilson v.
no
Shaw,
In- AU’s case the Commissioner, of course, cannot and does not contend that tax refund income suit alter- native is available. AU received status, 501 (c) (4) upon *21 not ánd it is exemption, 501§ revocation of retains tax as it long to income so subject federal available, is that alternative Whenever (c)(4) status. availability ante, p. Bob such University, Jones in .as remedy but only of at law indicates the existence a not tobe restrain injunction that the effect of would direct an the of taxes. collection n an alter- An FICA tax refund suit is available (cid:127) under election AU, native since has made its AU now irrevocable. (k)(l)(A) that election is conсeivably 3, supra. might bring n. Although See AU real unemployment taxes,12 a the refund suit for federal remedy question, one, is and a substantial whether adequate is an effective route deter- for AU is the (cid:127) mination of the issues involved. tax, A au- unemployment suit for refund of federal Code, thorized under the S. C. of U. (a), period imposed by. § of limitations directly
is' geared a determination of technical ready availability an Court assumes FUTA refund Ante, 762-763, curious, however, suit. n. It is that the Com at stages possibility in missioner did not assert this earlier litigation. only briefing suggested, apparently, It was after the main Arg. Appeals.' Tr. Oral It also note the Court of 36-37. worthy discussing problem former Thrower Commissioner has stated: quick possibility judicial appeal practical “There no organiza- deny exemption present. If tax or benefit we deductibility of contri- having tion of its the assurance donors butions, or taxable income either create net must litigable issue, find a who liability donor for itself as a other disallowed, contribution, willing have guinea pig is make as a Thrower, Considering Far Is IRS litigate the disallowance.” Exempt Organizations, 34 J. Reaching Changes Ruling Taxation 168 not, indication there is some proeedurally feasible or
Whether practice. common are not such suits *22 con larger not to the liability aspects of FUTA is an artificial refund suit most, At issues. the stitutional entitlement other than questions adjudicate vehicle eligibility liability on. and not on its focus is refund; is doubt It most (c)(2)(D). (a)(1) under §§ a regard would ful, potential contributors also, such, re the possessing as in a suit favorable outcome Assuming ruling. letter liability a favorable that.AU in an FUTA.re claims litigate could its constitutional Inc. Ministry, National fund Christian Echoes suit, see (CA10 denied, States, F. 2d cert. 1972), v. United (1973),13 are other 414 U. there obstacles path. suit,
The be until may refund maintained claim The for refund has been filed. federal unemployment imposed thus, basis; tax is an annual no refund can expiration year be claimed until the of the paid. which (a)(1), usual, the Section 6532 precludes the suit until the claim denied or six months have passed from filing. the date of Once suit is insti- tuted, the Government has at least 60 the days answer complaint. optimum Under coop- conditions and with eration, period the minimum of time required to achieve objective the through the refund suit is one to years two from: the timé revocation.14 This is delay if the
13In Christiün a nonprofit religious Echoes corporation sued for refund of aggregate FICA taxes in an paid amount exceeding,8103,000 over years. seven taxable suit, course, was to recover paid, but taxes challenges constitutional to § (c)(3) legal were arguments. basic suggestion is no There opinion court’s that Christian Echoes’ primary concern was this, loss of contributions; however, must have been of relative importance. 14Former Thrower, Commissioner in the cited' above, article stated that “the issue under the best of hardly circumstances could come year before a until court at least a year after the tax in which is- is taken. appeal no Government wins resolution ultimate follows, delay appeal If an Echoes, supra, where Christian g., E. drags on. wqs review judicial and final in 1966 was revoked
ruling be perhaps this is While in 1973. only concluded refund ordinary tax in an endured, be and must expected, adequacy defeats magnitude suit, delаy of this exist- organization’s very remedy philanthropic when a ence is at stake. small sums hazards. When
There are still other the Government liability, FUTA issue, as with AU’s *23 refund. intentionally concede the may inadvertently or may not is not for sound administration unlikely, This a expense necessary to contest warrant time conceivably when issues claim of small amount vital Scientology profound precedents at stake. Church States, (CA9 1973), v. United F. 2d 313 illustrates of a effort to win dismissal when Government’s case Riddell, a refund had made. Mitchell been See also 1968), (CA9 402 F. appeal 2d 842 dismissed and cert. denied, Theie little U. S. 456 doubt that authority possesses the Commissioner re make the fund and if he moot-the suit chooses not to un litigate the I derlying Although issues. with the agree Commissioner crisps. Ordinarily, longer sue it would much take for the case of - organization’s be status to tried.” 34 J. Taxation 168. significant The former Commissioner also made with re- remarks spect judicial to the need for determination of issues involved in this precluded interpretation will case that be the Court's 7421': of § extremely "This is an unfortunate situation for several reasons. First, justice my delay it offends imposed sense of for undue to be Second, on one prompt practical who needs decision. effect gives greater it finality to IRS than we decisions would want or Congress Third, growth intended. body inhibits the of a of case interpretive law exempt organization provisions that could guide Ibid. the IRS its further deliberations.” like in the case do so in a situation instant that to n. Brief for Petitioner 35 faith, -would amount to bad impossible organization to‘prove it would an be almost where, here, bad faith the sum at issue is minimal and inadvertence' or sound administration could be a valid reason for the refund. question is a substantial there whether
Additionally, victory an organization’s eventual in a refund would suit accomplish goal.. has asserted that Commissioner practice “normal is to issue a ruling upon favorable application organization of an prevailed which has in a Reply suit,” court Brief for 31. Still, Petitioner n. 34— Exempt IRS Handbook states: Organizations .“An which obtains a Tax Court coürt holding Federal decision exempt it to be must file an exemption application and right establish its exemption before the Service will recognize its exemption for years subsequent to those involved in the Department court decision.” of Treasury, Internal Revenue Manual, Part c. XI, (11) 671, ¶
Whatever the may ..practice be, internal the published procedures cast serious doubt on the adequacy of the *24 refund suit to resolve the organization’s- urgent prob- lem. The ruling revenue prospective has application, whereas a court operates determination retrospectively, to the the pleadings extent proof and the applicable statute of permit.15 limitations Thus, the scope of relief available in a refund suit' is also uncertain. The orga- 15 Note, See Procedural Due Process Limitations on Suspen sion- of Advanced Assurance: of Deductibility, 47 S. Cal. L. Rev. 11974), 427 for a detailed discussion considerations constitutional letterrrulitig IRS revocation without hearing.' .a
7S1 choosing be- with the- dilemma of is then faced nization suit, which the Court pre-assessment tween so-called a little' says bring, and a refund suit it cannot decides a tax lia- particular year’s more the correctness of than bility (which in case has been and is little paid concern). or no by “friendly” staged
.The suit donor is the Commis- other The suit suggestion. (cid:127)sioner’s donor’s suffers the problems. same time organization is off the Cumu- . List
lative at least until the donor establishes entitle- his ment (a)(1) §§.170 and. (D) deduction. This may suit also be mooted. Moreover, by litigation donor accommodating permit does not its rights and interests. Could the donor make assert the First equal protection Amendment and claims- seeks to only rely .AU have determined? Not must AIT on a contributor to raise issues it, for. must find but it á donor both to is-willing who contribute and to under- take litigation. the task of strains largesse This to the extreme, particularly since suit will subject the donor .full routine audit his own return. conclude that neither is adequate course an remedy
L for an' irreparably harmed organization to vindicate its n .claims.16 Thus, equitable relief in form injunc- of an tion not inappropriate. 16The suggested contention that the remedies by the Commissioner inadequate supported most of the who have commentator^ addressed the issue since these cases were decided in the Courts
Appeals. Note, See Implications Constitutional of Withdrawal of Federal Tax Benefits Segregated From Private Schools, 33 Md. 51, L. Rev. Note,.The Status, 53 (1973)’; Privileged Loss of Tax and Suits Assessments, to Restrain- 573, Wash. & L. Lee Rev. (1973); Comment, Avoiding Anti-Injunction Statute in Suits Enjoin Tax-Exempt Termination Status, Mary &Wm. L. Rev. 1014, (1973); Development, Recent 73 Col. L. Rev. 1513- (1973); Notes, Temp. L. Q.
IY
The last
issue is whether
complaint
amended
presented a substantial' constitutional question om the
merits justifying the convening of a three-judge court
under 28 U.
C. § 2282. The test was enunciated in
.S.
parte
Ex
Poresky, 290 U. S.
32 (1933), and
30,
restated
Goosby Osser,
v.
409 U.
S.
(1973),
and in
Hagans
Lavine,
I, course, imply no opinion on the merits of the underlying controversy. I Since join cannot
. Court’s reversal of the Court Appeals’ I judgment, respectfully dissent.