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The Complaint names Motorola, Inc., Nokia Corporation, Microsoft Corporation, Apple

Computer, Inc., IBM Corporation, Toshiba Corporation, Sony Corporation, and Hewlett-Packard

Company as part of a non-exhaustive list of representative members. (Compl. ¶ 15 (Dkt. No. 1).)

ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

BLUETOOTH SIG, INC.,

Plaintiff,

v.

UNITED STATES OF AMERICA,

Defendant.

CASE NO. C05-1778-JCC

ORDER 

This matter comes before the Court on Plaintiff’s Motion for Summary Judgment (Dkt. No. 47),

Defendant’s Response (Dkt. No. 52), and Plaintiff’s Reply (Dkt. No. 58), as well as Defendant’s Motion

for Summary Judgment (Dkt. No. 49), Plaintiff’s Response (Dkt. No. 56), and Defendant’s Reply (Dkt.

No. 57). Having considered the parties’ briefing and supporting documentation, and determining that oral

argument is unnecessary, the Court hereby finds and rules as follows.

I. BACKGROUND

Plaintiff Bluetooth SIG, Inc. (the “Association”) was incorporated as a Delaware nonprofit

corporation on November 13, 2000 to advance its members’ “common business interest in the

development and regulation of technical standards for the compatibility and interoperability of wireless

products and devices within a wireless personal area network (‘WPAN’).” (Pl.’s Mot. 2 (Dkt. No. 47).)

The Association currently has 4,148 members, including major technology companies,1

 that share an

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interest in selling products and devices that could be part of a consumer’s WPAN, including but not

limited to computers, printers, mobile telephones, telephone headsets, and digital cameras. (Compl. ¶¶

12–13 (Dkt. No. 1).) In furtherance of this objective, the Association performs a variety of functions,

which it characterizes as falling into three categories: “(1) development of specifications and use

applications; (2) development of testing procedures and trademark usage; and (3) promotion of consumer

awareness and marketing.” (Pl.’s Mot. 3 (Dkt. No. 47).) The Association conducts these activities

through its “Bluetooth” technology and trademark.

“Bluetooth” is a radio-based technology that supports short-range, wireless connections between

different devices. (Id. at 10.) It is not the only technology for wireless connectivity within a WPAN,

though the viability of current alternatives is a subject of much debate between the parties. (See, e.g.,

Pl.’s Mot. 11–12 (Dkt. No. 47); Def.’s Resp. 2–3 (Dkt. No. 52).) The Association’s core Bluetooth

technology has been expanded for use in products across industries with the use of application profiles.

(Def.’s Mot. 5 (Dkt. No. 49).) It is not the case that all products equipped with Bluetooth technology are

automatically interoperable. Rather, Bluetooth-compliant products must also be designed to work

together. (Def.’s Mot. 9 (Dkt. No. 49).) 

The first activity of the Association, enumerated above, is the “development of specifications and

use applications.” This refers to the process by which the Association, through its working groups,

develops the Bluetooth specification, which is “the written document defining the Bluetooth technology.”

(Pl.’s Mot. 3 (Dkt. No. 47).) This specification has changed, and presumably will continue to change over

time, and is the collaborative work product of some subset of the Association’s members. (Id.) 

The second type of activity in which the Association engages is the “development of testing

procedures and trademark usage.” The testing procedures are those the Association uses to decide

whether a particular product, manufactured by a member of the Association, meets Bluetooth

specifications. Products that meet the specification are eligible for listing on the Association’s website as

a Bluetooth-qualified product, and may be marketed by the manufacturer with the Bluetooth trademark.

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(Id. at 4–5.) The Association has employed two different testing procedures since its inception. At the

times relevant to this lawsuit, the procedure in place required that a member manufacturer present its

product for testing at an “independent” testing facility. (Id.) It is not entirely clear what Plaintiff means by

“independent” in this context, since it appears that any such testing facility must be a member of, and pay

an annual fee to the Association, in addition to being an accredited test laboratory. (Id. at 5.) The results

are then taken to an individual trained to review such test results for certification. These individuals must

be approved by the Association, and as with approved testing facilities, they must pay an annual fee to the

Association. (Id. at 5.) These testing facilities and individuals are responsible for setting the fees charged

to manufacturers for the services they render. (Id.) In addition to its role in the testing and certification

process, the Association also protects the Bluetooth trademark, which includes identifying violations,

informing suspected violators of their actions, demanding compliance, and possibly litigation. (Id. at 6–7.)

Finally, the third set of activities engaged in by the Association is promotion of consumer awareness and

marketing of the Bluetooth brand. (Id. at 7.) 

The Association is comprised of three classes of members: Promoter Members, Associate

Members and Adopter Members. (Id. at 8.) Adopter-level membership is free of charge. The main

advantage conferred by such membership appears to be the right to list a product as Bluetooth-compliant

and to use the Bluetooth trademark, which Adopter members may do upon payment of a $10,000 listing

fee and qualification of the product according to the process described above. Adopter members can also

access something called the Profile Tuning Suite (“PTS”) with a one-time payment of $7,500. (Id. at

9–10.) The next step up is Associate-level membership, which offers free access to PTS, the right to “sit

on developmental working groups, study groups and committees,” a fifty percent discount on the listing

fee charged to Adopter members, and the right to attend various meetings and access certain research

reports. However, Associate members are also the only class that pays an annual fee, ranging from

$7,500 to $35,000 per year depending on whether the member’s total revenues exceed $100 million. (Id.

at 9.) Finally, Promoter members have all the privileges of Associate level membership, and also hold a

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seat on the Association’s board of directors. It appears that the Promoter class is not simply available to

all comers by application; it has been expanded from the original five member group only once, when it

added three new members based on invitation and payment of a $350,000 fee. (Def.’s Resp. 4 n.4 (Dkt.

No. 52); Pl.’s Mot. 8–9 (Dkt. No. 47).) Promoter-level members also have their names and logos

displayed on the Association’s web sites and some of its documents. (Pl.’s Resp. 6 (Dkt. No. 56).) 

In early 2002, the Association filed paperwork with the Internal Revenue Service (“IRS”)

claiming an exemption from federal income tax as a “business league” under Code Section 501(c)(6).

(Pl.’s Mot. 12 (Dkt. No. 47).) On or about February 23, 2004, the IRS issued a final adverse ruling

stating that the Association did not qualify for exemption under 501(c)(6). (Id.) Consequently, the

Association filed corporate income tax returns for its 2000, 2001, and 2002 tax years, and claims that it

has paid a total of $928,730.96 for those respective years. After filing refund claims to no avail, the

Association brought this action seeking a full federal income tax refund for the years listed above, or in

the alternative, a refund of penalties, additions to tax and interest. (Compl. ¶¶ 57–65 (Dkt. No. 1).) Both

parties have now filed motions for summary judgment. In addition to requesting summary judgment on its

refund claim, Plaintiff also seeks a declaration that it is exempt from federal income tax under IRC

501(c)(6). (Pl.’s Mot. 1 (Dkt. No. 47).) 

II. DISCUSSION

A. Standard of Review

Summary judgment is appropriate where “the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). There is no genuine issue for trial unless

there is sufficient evidence to support a jury verdict in favor of the nonmoving party. Anderson, 477 U.S.

at 250. The moving party has the burden of demonstrating the absence of a genuine issue of material fact.

Id. at 257. Furthermore, the Court must draw all reasonable inferences in favor of the nonmoving party.

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See F.D.I.C. v. O’Melveny & Myers, 969 F.2d 744, 747 (9th Cir. 1992), rev’d on other grounds, 512

U.S. 79 (1994).

In addition to demonstrating that there are no questions of material fact, the moving party must

also show that it is entitled to judgment as a matter of law. Smith v. Univ. of Washington Law School,

233 F.3d 1188, 1193 (9th Cir. 2000). The moving party is entitled to judgment as a matter of law when

the nonmoving party fails to make a sufficient showing on an essential element of a claim for which the

nonmoving party has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 

In tax refund suits, it is “a settled principle that exemptions from taxation are not to be implied;

they must be unambiguously proved.” United States v. Wells Fargo Bank, 485 U.S. 351, 354 (1988).

Therefore, “taxpayers must prove unambiguously that they are entitled to exemptions,” and “if ‘doubts

are nicely balanced’ regarding the applicability of a tax exemption, the exemption must be accorded its

more limited interpretation.” Tupper v. United States, 134 F.3d 444, 446 (1st Cir. 1998) (quoting Trotter

v. Tennessee, 290 U.S. 354, 356 (1933)). Accordingly, while the Court construes all factual ambiguities

in favor of the non-moving party, “legal ambiguities must be resolved in favor of the United States.”

Tupper, 134 F.3d at 446. Furthermore, “courts conduct a de novo review of the correctness of the

assessment, imposing the risk of nonpersuasion on the taxpayer.” Only in limited circumstances where a

particular administrative determination is shown to be “without rational foundation,” is it not “accorded a

rebuttable presumption of correctness.” Ruth v. United States, 823 F.2d 1091, 1094 (7th Cir. 1987).

B. “Business League” Under Section 501(c)(6) of the IRS Code

The parties agree that no issues of material fact preclude summary judgment in this case, and

therefore they center their dispute on whether the Association is entitled to an exemption under IRC

501(c)(6). This provision of the IRS Code offers exemptions for:

Business leagues, chambers of commerce, real-estate boards, boards of trade, or

professional football leagues (whether or not administering a pension fund for football

players), not organized for profit and no part of the net earnings of which inures to the

benefit of any private shareholder or individual.

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 “A business league is an association of persons having some common business interest, the

purpose of which is to promote such common interest and not to engage in a regular business of a kind

ordinarily carried on for profit. It is an organization of the same general class as a chamber of commerce

or board of trade. Thus, its activities should be directed to the improvement of business conditions of one

or more lines of business as distinguished from the performance of particular services for individual

persons. An organization whose purpose is to engage in a regular business of a kind ordinarily carried on

for profit, even though the business is conducted on a cooperative basis or produces only sufficient

income to be self-sustaining, is not a business league . . .” 26 C.F.R. § 1.501(c)(6)-1. 

ORDER – 6

26 U.S.C. § 501(c)(6). It is Plaintiff’s contention that the Association is a “business league” as that term

is defined in the federal regulations.2

 To decide whether a particular entity qualifies as a “business league”

under the Code, courts in this circuit have distilled the definition set forth in the regulations into a six

factor test, which requires that the entity be: “(1) of persons having a common business interest; (2)

whose purpose is to promote the common business interest; (3) not organized for profit; (4) that does not

engage in a business ordinarily conducted for profit; (5) whose activities are directed to the improvement

of business conditions of one or more lines of business as distinguished from the performance of

particular services for individual persons; (6) of the same general class as a chamber of commerce or a

board of trade.” Engineers Club of San Francisco v. United States, 791 F.2d 686, 689 (9th Cir. 1986).

While Defendant does not concede any of the six factors set forth above, the crux of the dispute is

whether Plaintiff has demonstrated that it satisfies the fourth and fifth factors. (Def.’s Mot. 16–24 (Dkt.

No. 49).) 

i. “Business ordinarily conducted for profit”

Defendant contends that the Association’s activities, in particular its development and marketing

of the Bluetooth technology and brand, are of a kind ordinarily carried on for profit; Plaintiff asserts that

these activities are consistent with those of entities recognized as exempt under § 501(c)(6). (Def.’s Mot.

22–23 (Dkt. No. 49); Pl.’s 17–19 (Dkt. No. 56).) While Plaintiff is surely correct that the mere fact that it

conducts testing and promotional activity does not disqualify the Association from the exemption, see

American Plywood Ass’n v. United States, 267 F.Supp. 830, 833–36 (W.D. Wash. 1967), it does beget a

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fact-intensive, contextual assessment of the Association’s activities. Such assessment yields the distinct

impression that the Association “engage[s] in a business ordinarily conducted for profit.” Engineers Club

of San Francisco, 791 F.2d at 689. 

To reach this conclusion, it is necessary to first understand the relevant “business.” Whereas the

Association’s members are in the business of selling cellular phones, computers, or other such devices,

the question here is whether the Association itself, as a distinct entity, operates as a business ordinarily

conducted for profit. The Association has created a particular technology standard that enables multiple

devices, of different types and perhaps by different manufacturers, to be used together. It appears that

Bluetooth is the most developed and prevalent of such technologies for use within a designated range,

though Plaintiff does not contend that other technologies could not or have not been developed to

perform the same function. The mere fact that the Bluetooth specification is always changing

demonstrates that there is not one single magic formula in the universe of such technologies for use

within a WPAN. Nonetheless, Bluetooth’s dominance in this regard, perhaps a testament to the

cooperative efforts of its members, has made its trademark a valuable commodity. 

As with any commodity with value in the marketplace, it is for sale. That is, a manufacturer can

buy the right to sell a particular product, such as a cellular phone, as “Bluetooth compliant,” by doing at

least two things. First, it must become a member of the Association at one of the three levels of

membership, which may or may not require payment of a fee. Second, it must undergo and pay for the

testing and qualification procedures set forth by the Association, and upon completion, it must pay a

listing fee to the Association of $5,000–$10,000. (Def.’s Mot. 9 (Dkt. No. 49).) For those who might

wish to participate in developing the Bluetooth specification, membership at a level requiring payment of

some kind of fee appears to be required. That this is a collaborative effort by competitors does not

change the fact that the Association is developing and selling a “product,” much like a business ordinarily

conducted for profit. Finally, as with any business with valuable proprietary information, the Association

defends its property interests against those who would appropriate it without paying by threat of

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litigation. 

Plaintiff relies heavily on American Plywood Association v. United States, 267 F.Supp. 830 (W.D.

Wash. 1967) for the proposition that its activities are consistent with a tax-exempt “business league.”

(Pl.’s Resp. 17–18 (Dkt. No. 56).) In that case, the court held that a nonprofit corporation comprised of

softwood plywood manufacturers was entitled to a tax exemption under § 501(c)(6). Specifically, the

court found that the association’s quality control activities, including inspection and testing based on

quality standards developed by the association, and its promotional activities, which included use of the

association’s trademark for compliant grade plywood, did not constitute such “principal activities” as

would disqualify the association from the exemption. (Id. at 833–36.) 

While not bound by the holding in American Plywood, no evaluation of its merits is necessary

here, since it is distinguishable from the case at bar. In casting its lot with American Plywood, Plaintiff

points to a number of similarities between the trade association in that case and the Association here.

Both were advocating wider use of a product; both established testing and qualification standards; both

established and promoted trademarks. However, there is also at least one significant difference between

the two organizations. Whereas the plywood association served as a vehicle for advancing a common and

pre-existing interest between members, the Association in this case was formed to create a common

interest between its members. Put another way, the product in American Plywood was something the

members were already selling to begin with; the product here is something the members banded together

to create. Thus, the collective enterprise of the Association derives from the fact that it has created a

thing of value, which its members can then use to enhance the value of the products they sell. 

This is a distinction of consequence under the rationale of American Plywood, because of that

court’s emphasis on “principal” and “incidental” activities. American Plywood, 267 F.Supp. at 832–33

(“The rule is well established that a trade association whose main purpose justifies exemption from

income tax will not forfeit tax exempt status by engaging in incidental activities which, standing alone,

would be subject to taxation”). In delineating principal activities from incidental activities in that case, it

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 The rationale being that plywood meeting the association’s criteria and bearing its trademark

presumably had an advantage over plywood that did not. 

ORDER – 9

was significant that the association’s members came together with a common interest in expanding the

use of plywood as a building material. While they surely sought to compete with each other over whose

plywood was better, they could all agree that selling more plywood was better for everyone, and it was

this latter purpose for which the association was principally formed. Thus, while that association’s quality

control and promotional activities did create a basis for choosing between plywood manufacturers,3

 this

was “incidental” to the organization’s main purpose, which was to broaden the use of plywood in the

building materials market. In the present case, the Association creates, markets, and sells a thing of value.

That it also helps the Association’s members sell their products does not change this fact. Furthermore, it

can be no answer that, as Plaintiff asserts, Bluetooth is better characterized as a “standard” rather than a

“brand.” (Pl.’s Resp. 5 (Dkt. No. 56).) The Bluetooth specification and accompanying trademark is

obviously something worth paying for, and therefore the standard is the brand. In this way, the

Association’s activities are more like a garden variety business than a business league or chamber of

commerce. 

ii. “Line of business” versus “particular services for individual persons”

Plaintiff must also demonstrate that its “activities are directed to the improvement of business

conditions of one or more lines of business as distinguished from the performance of particular services

for individual persons,” in order to qualify for an exemption under § 501(c)(6). Engineers Club of San

Francisco, 791 F.2d at 689. Defendant contends that Plaintiff’s activities do not improve business

conditions for “one or more lines of business,” but rather offer “particular services” for individual

members. (Def.’s Mot. 16–22 (Dkt. No. 49).) To refute this claim, Plaintiff again relies on American

Plywood Association v. United States, 267 F.Supp. 830 (W.D. Wash. 1967).

A number of cases over the years have wrestled with this factor in applying the § 501(c)(6)

exemption. Some of these cases place particular emphasis on how the organization’s activities benefit a

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particular brand or manufacturer at the expense of others, therefore failing to meet the “line of business”

test. Drawing an analogy with First Amendment jurisprudence, the problem is that the organization’s

activities are not “viewpoint neutral” in the marketplace. Thus, in National Muffler Dealers Ass’n, Inc. v.

United States, 440 U.S. 472 (1979), a trade organization for muffler dealers failed to demonstrate exempt

status because its membership was confined to dealers franchised by one particular dealer, Midas

International Corporation, to the exclusion of other muffler dealers. Similarly, Guide Int’l Corp. v.

United States involved a nonprofit organization whose “principal activity [was] the sponsorship of weeklong conferences that [were] held three times a year and focus [sic] on data processing matters.” 948

F.2d 360, 361 (7th Cir. 1991). There, the court found that even though the organization’s stated purpose

was “to facilitate the use and exchange of information regarding data processing equipment in general,”

the primary beneficiary of these activities was one company, IBM, which represented “only a segment (70

to 75%) of the mainframe computer business, not a line of business.” (Id. at 362 (emphasis in original)).

Thus, the organizations in National Muffler and Guide Int’l failed to show exempt status because they

effectively put a thumb on the scale in favor of a particular manufacturer within an industry. 

Other cases applying this analysis upheld denials of exemption by emphasizing asymmetrical

benefits for the organization’s members, rather than for a certain manufacturer. For example, Engineers

Club of San Francisco involved an organization that “serve[d] its members, and the professional societies

to which they belong, by providing meetings and meeting space, logistical support, a location for

operations, mailing service, telephone service, storage of records, and other facilities and services.”

Acknowledging that “[o]rganizations frequently fail to qualify for business league status even though

their activities confer collective benefits,” the court found that the Club performed services “for individual

persons and organizations rather than the engineering profession as a whole.” (Id. at 690.) Similarly, in

MIB, Inc. v. Comm’r of Internal Revenue, 734 F.2d 71 (1st Cir. 1984), the court found that a nonprofit

corporation that provided a data bank for exchanging information in the life insurance industry was not

exempt as a “business league.” The court framed the “ultimate inquiry [as] whether the association’s

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activities advance the members’ interests generally, by virtue of their membership in the industry, or

whether they assist members in the pursuit of their individual businesses.” (Id. at 78.) While calling the

organization’s activities “totally commendable,” the court noted that only members of the organization

had access to the data bank, and therefore despite “various indirect and intangible benefits for the

insurance industry as a whole,” the organization was essentially providing “particular services for

individual persons.” (Id. at 77.) The court also explained that “[w]hen each member contributes in

proportion to what he receives, it is a strong indication that the benefits received are not . . . ‘inherently

group benefits.’” (Id. at 79 (quoting Evanston-North Shore Bd. of Realtors v. United States, 320 F.2d

375, 379 (Ct. Cl. 1963))). 

Defendant maintains that the Association in this case devotes its activities “to the promotion of a

particular product at the expense of others in the industry.” (Def.’s Mot. 19 (Dkt. No. 49) (quoting

National Muffler, 440 U.S. at 483–84).) On this theory, “Bluetooth technology is not an industry; rather

it is a brand of technology which exists in and competes across multiple industries.” (Def.’s Mot. 20 (Dkt.

No. 49).) Plaintiff responds first by arguing that it does in fact represent an entire line of business because

“Bluetooth technology is so unique that the overwhelming majority of Bluetooth customers could not

replace it with another technology on reasonable commercial terms.” (Pl.’s Resp. 8 (Dkt. No. 56).)

Responding to Defendant’s claim that it performs particular services for individual members, the

Association emphasizes the group benefits conferred by its activities: “As in American Plywood, the

Association’s existence has generated consumer awareness of the availability and reliability of devices

that transmit data within a WPAN, and thereby benefited [sic] unqualified WPAN products and

nonmember manufacturers.” (Id. at 15.)

The Court begins by noting that an “industry” can be a somewhat malleable concept. For this

reason, it is debatable what the relevant industry is here. Defendant’s position is that Bluetooth

technology is not an industry, but rather a competitor in multiple industries (i.e. personal computers, cell

phones, etc.). Plaintiff chooses to define the relevant industry at a higher level of specificity (WPAN

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technology), and then asserts that Bluetooth, as a standard for wireless connectivity, is the only practical

option and therefore effectively represents that industry. Whatever its merits, Plaintiff’s position is a

distinct departure from the posture of the organization in American Plywood. In that case, the

organization did not purport to represent the plywood certification “industry”; it represented the

plywood industry, on whose behalf it conducted testing and certification. This is just to say that in the

cited cases, the relevant industry was what members did aside from the particular organization; it was not

what they developed as a result of their membership.

The stake of the parties’ disagreement on how to define the relevant industry is whether National

Mufflers and Guide Int’l control this case. Regardless of how this question is answered, it is clear that the

Association performs “particular services for individual persons,” as set forth in Engineers Club and MIB,

and therefore fails to demonstrate it is a “business league” within the meaning of the IRS Code. That is,

even assuming that the Association’s activities do not place a thumb on the scale in favor of a particular

brand or manufacturer within an industry, they most certainly inhere to the exclusive benefit of its

members. It is undisputed that use of the Bluetooth trademark is absolutely limited to members who pay

the appropriate listing fee. In this way, the service provided by the Association is largely indistinguishable

from the data bank and information exchange provided by the nonprofit corporation in MIB. There, as

here, something of value is offered to all comers on the condition that they pay for it, and the benefits are

in proportion to the contribution. 

Furthermore, that the service may have “indirect and intangible benefits” for the industry as a

whole, however defined, is not sufficient. MIB, Inc., 734 F.2d at 77. In this case, it is hardly clear that the

benefits to nonmembers of the Association are even so much as “indirect” or “intangible.” It strains

credulity for Plaintiff to argue that by “generat[ing] consumer awareness of the availability and reliability

of devices that transmit data within a WPAN,” the Association’s activities somehow benefit “unqualified

WPAN products and nonmember manufacturers.” (Pl.’s Resp. 15 (Dkt. No. 56).) Taking Plaintiff’s

factual representations as true, the rationale would have to be that would-be consumers of products with

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wireless technology, when presented with a “choice” of a product with “no reasonable commercial

substitute,” would opt for the unreasonable choice with greater frequency because of how impressed they

are with the Bluetooth brand. Both simple logic and Bluetooth’s dominant market position belie this

theory. From the standpoint of manufacturers, Bluetooth quite simply benefits those who use it, which is

why it is for sale.

C. Other Administrative Determinations

Plaintiff asserts that the Internal Revenue Service has treated similarly situated entities differently

than the Association with respect to exemption under § 501(c)(6). (See, e.g., Pl.’s Mot. 12 (Dkt. No.

47).) Defendant’s response is simply that the Court may not take these or other administrative

determinations into account to decide this case. (See, e.g., Def.’s Resp. 7–12 (Dkt. No. 52).) In reply,

Plaintiff argues that the cited administrative determinations are at least instructive for how the Court

should make its de novo determination. (Pl.’s Reply 9 (Dkt. No. 58).) 

While the IRS would obviously be well-advised to treat similarly situated taxpayers similarly,

there is simply not enough information on the record for the Court to draw the comparison Plaintiff

requests. As the foregoing analysis attests, the question of whether a particular entity is a “business

league” under IRC § 501(c)(6) is a highly contextual, fact-intensive inquiry. That the tax-exempt entities

cited by Plaintiff are also “standard-setting associations” is hardly sufficient for the Court to decide that

they have been accorded disparate treatment. More importantly, the Court is satisfied that whatever the

merits of the IRS’ prior determinations, this one was a sound interpretation of the Code. 

D. Plaintiff’s Claim for Refund of Penalties, Additions to Tax and Interest

In Count II of the Complaint, Plaintiff requests a refund of penalties, additions to tax and interest

if it is found that the Association was subject to federal income tax during its 2000 tax year. (Dkt. No. 1.)

Plaintiff’s position is that its failure to file or pay federal income tax for that year was “due to reasonable

cause and not willful neglect . . .” (Compl. ¶ 65 (Dkt. No. 1).) It appears that Defendant’s Motion for

Summary Judgment does not reach this claim, and therefore the Court has no basis upon which to render

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a decision.

III. CONCLUSION 

The issue decided here is not whether the Association’s activities are socially and economically

beneficial. Certainly the stature of the companies comprising the Association’s membership would

suggest that its activities at the very least make good business sense. The issue is whether the Association

qualifies as a “business league” under § 501(c)(6) of the tax code. For this proposition, the Court decides

in the negative. 

For the foregoing reasons, Plaintiff’s Motion for Summary Judgment (Dkt. No. 47) is DENIED,

and Defendant’s Motion for Summary Judgment (Dkt. No. 49) is GRANTED. Specifically, Count I of

the Complaint is dismissed with prejudice. The parties have since moved to continue the trial date in this

matter. (Dkt. No. 66.) That motion is hereby GRANTED and therefore the new trial date is April 28,

2008. However, since the parties contend that no issues of material fact remain in this case, they are

instructed to file a motion concerning the issue raised by Count II of the Complaint by February 22, 2008.

SO ORDERED this 1st day of February, 2008.

AJohn C. Coughenour

United States District Judge

 

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