CHRISTIAN COALITION OF FLORIDA, INC., Plaintiff - Appellant, versus UNITED STATES OF AMERICA, Defendant - Appellee.
No. 10-14630
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
November 15, 2011
D.C. Docket No. 5:09-cv-00144-WTH-GRJ; [PUBLISH]
Before MARCUS, WILSON and COX, Circuit Judges.
(November 15, 2011)
MARCUS, Circuit Judge:
Christian Coalition of Fla. (“CC-FL”) appeals the district court’s dismissal of its tax refund suit for mootness. Shortly after the litigation began, the Internal
After thorough review, we AFFIRM the judgment of the district court. Filing a claim for a tax refund suit is not simply a procedural hurdle that, once leapt over, allows a party to seek other forward-looking relief against the IRS after the refund has been granted. Without a live refund claim, there is no way to distinguish this case from the kind of pre-enforcement suits that Congress, through the Anti-Injunction Act and the federal tax exemption to the Declaratory Judgment Act, has expressly forbidden taxpayers from bringing.
I.
CC-FL is a Florida non-profit corporation, founded in 1990. According to its complaint, CC-FL is an “advocacy organization” that “teaches concern for the sanctity of life, traditional family values, an economic system which fosters individual self-reliance, and faith in God.” CC-FL engages in a substantial amount of lobbying and “regularly publishes voter guides and legislative
Because of its lobbying activity, CC-FL could not seek tax exemption as a public charity under
On July 25, 2000, the IRS issued a proposed determination letter denying CC-FL’s application. On October 5, 2000, CC-FL filed a letter with the IRS protesting and appealing the proposed determination. Although the IRS and CC-FL held a conference on May 30, 2002 to discuss the proposed determination letter, the matter was put on hold while the IRS and The Christian Coalition
After that litigation concluded, the IRS issued, via a letter dated July 31, 2008, its final determination that CC-FL did not qualify for tax exempt status under section 501(c)(4). The IRS stated: “We made this determination for the following reasons: You were not primarily engaged in activities that promote social welfare. Your activities primarily constituted direct and indirect participation in political campaigns on behalf of, or in opposition to, candidates for public office.” The final determination letter also incorporated in full the earlier proposed determination letter, which discussed at greater length what the IRS viewed as CC-FL’s political activities, including publishing voter guides, releasing legislative scorecards right before elections, and conducting grassroots political activism seminars. The proposed determination letter concluded: “The emphasis throughout your materials is on electing to office ‘family friendly’ people in order to impact legislation and policy as insiders. The overwhelming majority of the evidence in the administrative record, and thus the facts and circumstances in this case, denotes an organization that is intent upon intervening in political campaigns.”
On September 25, 2008, CC-FL then filed amended tax returns requesting a full refund for these tax years on the ground that it is a tax exempt social welfare organization under section 501(c)(4). By statute, a taxpayer must wait six months before bringing a tax refund suit.
The IRS did not issue a refund or make a determination within the six
Shortly after the litigation was filed, the IRS began refunding CC-FL its claimed tax amounts.3 The IRS determined that, under
On August 17, 2009, the IRS moved to dismiss the refund suit for lack of subject matter jurisdiction under
II.
“A district court’s decision to grant a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) is a question of law we review de
A.
We begin with a brief discussion of the relevant jurisdictional statutes. The United States, as a sovereign entity, is immune from suit unless it consents to be sued. United States v. Dalm, 494 U.S. 596, 608 (1990); United States v. Testan, 424 U.S. 392, 399 (1976); United States v. Sherwood, 312 U.S. 584, 586 (1941). “[T]he terms of its consent to be sued in any court,” as expressed by statute, “define that court’s jurisdiction to entertain the suit.” Sherwood, 312 U.S. at 586. Accordingly, the terms of the statute or statutes waiving immunity are construed strictly, and courts may only entertain suits that are in full accord with such statutes. See Soriano v. United States, 352 U.S. 270, 276 (1957) (“[L]imitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied.” (citing Sherwood, 312 U.S. at 590-91)); accord McMaster v. United States, 177 F.3d 936, 939 (11th Cir. 1999).
The primary jurisdictional statute governing judicial review of federal tax decisions is
The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of: (1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]
Aside from the statutes describing the affirmative requirements for bringing a tax refund suit, Congress has also expressly excluded from judicial review other types of federal tax disputes. The Declaratory Judgment Act (“DJA”),
Taking these provisions together, it is clear that, with certain exceptions not applicable here, judicial review of IRS determinations is largely circumscribed to entertaining suits for the refund of already-paid taxes. See Bob Jones Univ. v. Simon, 416 U.S. 725, 731-32 & n.7 (1974) (noting the “congressional antipathy for premature interference with the assessment or collection of any federal tax” and that the “pressures operating on organizations . . . to seek injunctive relief
B.
“Article III of the Constitution limits the jurisdiction of federal courts to ‘cases’ and ‘controversies.’” Socialist Workers Party v. Leahy, 145 F.3d 1240, 1244 (11th Cir. 1998). As we have explained, there are “three strands of justiciability doctrine -- standing, ripeness, and mootness -- that go to the heart of the Article III case or controversy requirement.” Harrell v. The Fla. Bar, 608 F.3d 1241, 1247 (11th Cir. 2010) (internal quotation marks and alterations omitted). With regard to the third strand, the Supreme Court has made clear that “a federal court has no authority ‘to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it.’” Church of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992) (quoting Mills v. Green, 159 U.S. 651, 653 (1895)); see Harrell, 608 F.3d at 1265. As a panel of this Court has put it, “[a]n issue is moot when it no longer presents a live controversy with respect to which the court can
1.
CC-FL contends that the district court erred in concluding that CC-FL could not seek declaratory and injunctive relief after being granted a full refund because of the Anti-Injunction Act and the tax exception to the Declaratory Judgment Act. CC-FL claims those statutes do not apply in post-enforcement refund suits (even when there is no longer a live refund component to the suit), as opposed to pre-enforcement suits filed before the assessment or collection of any tax. CC-FL’s theory is that, having jumped through all of the congressionally-mandated hoops by properly filing a refund claim for $261 to unlock the courthouse doors, it may now seek the relief it wanted all along -- declaratory and injunctive relief -- even when the $261 is no longer at issue.
The government responds that this case has become moot, noting that the
The government has the better of the argument. Although neither the Supreme Court nor this Circuit has squarely addressed whether declaratory and injunctive relief are available in the context of a tax refund suit, the leading case on the application of the Anti-Injunction Act is Bob Jones Univ. v. Simon, 416 U.S. 725 (1974). In Bob Jones, the Supreme Court made clear that the AIA prohibits courts from entertaining pre-enforcement suits challenging the IRS’s assessment or collection of federal taxes.8 The Court held that filing these
The facts and procedural posture of Bob Jones are instructive. Bob Jones University, located in Greenville, South Carolina, is a private Christian university. See id. at 734-35. At the time of the Supreme Court’s decision, the University refused to admit African-Americans as students and prohibited its students from interracial dating. Id. at 735. Although the University had been granted tax-exempt status back in 1942 under a predecessor of what is now
The Supreme Court recognized the substantial consequences revocation of tax-exempt status can have on a 501(c)(3) organization and the powerful incentives such organizations have to bring suits seeking declaratory and injunctive relief. Id. at 731. Nonetheless, the Supreme Court recognized that these “pressures operating on organizations facing revocation of § 501(c)(3) status to seek injunctive relief against the Service pending judicial review of the proposed action conflict directly with a congressional prohibition of such pre-enforcement tax suits.” Id. The Supreme Court went on to observe that the University could obtain review by paying income or employment taxes in full, and then bringing a suit for a refund. Id. at 746-47. The Court conceded that the
We do not say that these avenues of review are the best that can be devised. They present serious problems of delay, during which the flow of donations to an organization will be impaired and in some cases perhaps even terminated. But, as the Service notes, some delay may be an inevitable consequence of the fact that disputes between the Service and a party challenging the Service‘s actions are not susceptible of instant resolution through litigation. And although the congressional restriction to postenforcement review may place an organization claiming tax-exempt status in a precarious financial position, the problems presented do not rise to the level of constitutional infirmities, in light of the powerful governmental interests in protecting the administration of the tax system from premature judicial interference, and of the opportunities for review that are available.
Id. at 747-48 (citations omitted).
Finally, in a footnote on which CC-FL heavily relies, the Supreme Court emphasized that the University did not bring its case as a refund action. The Court stated that “we have no occasion to decide whether the Service is correct in asserting that a district court may not issue an injunction in such a suit, but is restricted in any tax case to the issuance of money judgments against the United States.” Id. at 748 n.22. The Court also noted that “there would be serious question about the reasonableness of a system that forced a § 501(c)(3)
CC-FL attempts to distinguish Bob Jones by claiming that the AIA and DJA only apply to suits seeking purely declaratory and injunctive relief, filed before any tax was assessed or collected. CC-FL argues that this case is different, because it met all of the jurisdictional and statutory requirements for a refund suit, and that this case falls into the scenario expressly left unresolved by the Supreme Court in Bob Jones: a tax refund suit in which the claimant also seeks declaratory and injunctive relief.
Absent a live refund claim, however, CC-FL’s attempt to distinguish this case from Bob Jones is unavailing. While CC-FL wanted to obtain its refund on the most favorable grounds possible, a refund is a refund, and the IRS returned all of the disputed taxes shortly after this litigation began. We need not decide today the still-unresolved issue of whether, in a live refund suit, a court may also award declaratory and injunctive relief. It is enough to say that, regardless of this case’s origins as a tax refund suit, absent any live refund component, the district correctly concluded that it was without jurisdiction to entertain a suit containing solely
The congressional response to Bob Jones is also instructive, and favors the government’s position here. Congress recognized the potential harshness of the Supreme Court’s holding for 501(c)(3) charities that might lose virtually all of their donations, and responded to the “serious question” raised by forcing 501(c)(3) charities to repeatedly file backward-looking refund suits. Accordingly, in 1976, Congress enacted
Notably, however, Congress did not enact any exception to the Declaratory Judgment Act or Anti-Injunction Act for organizations seeking tax-exempt status under other provisions of section 501(c), including for organizations like CC-FL
2.
CC-FL also contends that the case is not moot because it seeks more than the mere refund of $261 in federal taxes, and that collateral consequences result from the failure of the IRS to issue a favorable determination letter. CC-FL lists
We are not persuaded. These consequences do not allow us to carve out an exception to the unambiguous prohibitions found in the Anti-Injunction Act and Declaratory Judgment Act. In the first place, we have no power to rewrite the language of these statutes. United States v. Blue Cross and Blue Shield of Ala., Inc., 156 F.3d 1098, 1111 (11th Cir. 1998) (“When the language of a statute is
Moreover, CC-FL’s arguments prove far too much. As for CC-FL’s future federal and state tax liabilities, if those were sufficient to permit the district court to retain jurisdiction over the suit, then the limitations found in the Anti-Injunction Act and Declaratory Judgment Act would be rendered meaningless. Any taxpayer denied tax-exempt status will have to pay federal and state taxes going forward. If we were to adopt the rule urged by CC-FL, then all adverse IRS determinations regarding an organization’s claim to tax-exempt status would be susceptible to challenge in federal district court.
The Supreme Court’s discussion in Bob Jones also highlights the weakness of CC-FL’s claim that it would suffer reduced donations if denied declaratory or injunctive relief. Donations to 501(c)(3) charities -- unlike those to 501(c)(4) organizations that engage in lobbying activity -- are generally tax deductible, see
CC-FL’s collateral consequences argument is, at best, an incomplete attempt to satisfy the narrow judicially-created exception to the Anti-Injunction Act. In Enochs v. Williams Packing, the Supreme Court held that a taxpayer may seek preventative injunctive relief against the IRS only upon satisfying two independent prongs: first, that he will suffer “irreparable injury” if not awarded injunctive relief, and second, “that under no circumstances could the Government ultimately prevail.” 370 U.S. at 6-7. CC-FL’s claim of collateral consequences bears solely on the first prong of the Williams Packing test. The Supreme Court has made clear, however, that a taxpayer must establish both prongs of the judicial exception to the Anti-Injunction Act before a court may entertain his claim for
C.
CC-FL’s final claims are drawn from the judicially-created exceptions to the mootness doctrine. CC-FL first contends that even if the full refund of taxes would ordinarily render a refund suit moot, this case falls under the exception to the mootness doctrine governing cases or controversies “capable of repetition yet evading review.” “[T]he capable-of-repetition doctrine applies only in exceptional situations, and generally only where the named plaintiff can make a reasonable
The first prong of the exception -- that the challenged action is too short to be fully litigated -- is not met here. Nothing about the IRS’s adverse determination or assessment and collection of taxes is “too short to be fully litigated.” Every year in which CC-FL pays taxes, it may claim a refund, and, should the IRS fail to provide the refund within the six month statutory period, CC-FL may file a refund suit and obtain full judicial review of the dispute. As the Supreme Court has noted, “[t]hese review procedures offer petitioner a full, albeit delayed, opportunity to litigate the legality of the Service’s revocation of tax-exempt status and withdrawal of advance assurance of deductibility.” Bob Jones, 416 U.S. at 746. CC-FL says that it is too easy for the IRS to simply refund the taxes, either within the six month statutory period or shortly after litigation begins,
Nor is the second prong of the exception -- a reasonable expectation that the complaining party will be subject to the same action in the future -- met here. It is true, if stated broadly enough, that this case involves an issue (CC-FL’s tax exempt status) that is likely to arise in future years yet may never be fully considered by a federal court (because in a given year, CC-FL may incur no tax liability, or the IRS may choose to refund the inevitably small amount of CC-FL’s claim within the six month statutory window rather than litigate, as it did with respect to the 2005 and 2006 tax years). But a proper framing of the issue raised in this litigation is a narrower one.12 The issue is not whether CC-FL is a tax-
CC-FL’s second claim is that the IRS has voluntarily ceased its unlawful
While CC-FL rightly calls this a “heavy burden,” see Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000), it fails to recognize that the predicate condition has not been satisfied here. In refunding the amounts at issue in this case, the IRS did not abandon its practice or position -- voluntarily or otherwise -- that CC-FL is not a tax-exempt organization and that CC-FL should have paid corporate income taxes for the years at issue in the suit.
The order and judgment of the district court dismissing this case as moot are AFFIRMED.
Notes
Most of CC-FL’s operating budget is acquired in the form of non-taxable gifts excluded from its gross income pursuant to [I.R.C.] section 102. Consequently, CC-FL often has very little, if any, tax liability. For example, for the suit years, CC-FL reported gross receipts in excess of $2,009,700. Of that amount, approximately $1,700 dollars could properly be classified as taxable income, resulting in a tax liability of $261.
any civil action involving an antidumping or countervailing duty proceeding regarding a class or kind of merchandise of a free trade area country (as defined in section 516A(f)(10) of the Tariff Act of 1930), as determined by the administering authority, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.In a case of actual controversy within its jurisdiction, except with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1986, a proceeding under section 505 or 1146 of title 11, or in
(emphasis added). In other words, as a general matter, organizations recognized by the IRS as tax-exempt do not have to file state corporate tax returns in Florida.Any nonprofit or other tax-exempt organization, including a private foundation, which is exempt from federal income tax under Section 501(a), I.R.C., and is described in Section 501(c), I.R.C., is required to file a Form F-1120 [Florida corporate income tax return] only when such organization has “unrelated trade or business taxable income,” as determined under Section 512, I.R.C., or is filing a Form 990T with the Internal Revenue Service.