Source: http://openjurist.org/128/f3d/1294
Timestamp: 2013-12-21 10:01:38
Document Index: 741455618

Matched Legal Cases: ['§ 501', '§ 501', '§ 505', '§ 6012', '§ 362', '§ 362', '§ 362']

128 F3d 1294 Universal Life Church Inc Universal Life Church Inc v. United States Universal Life Church Inc | OpenJurist
128 F. 3d 1294 - Universal Life Church Inc Universal Life Church Inc v. United States Universal Life Church Inc	Home128 f3d 1294 universal life church inc universal life church inc v. united states universal life church inc
128 F3d 1294 Universal Life Church Inc Universal Life Church Inc v. United States Universal Life Church Inc 128 F.3d 1294
80 A.F.T.R.2d 97-6872, 97-2 USTC P 50,764,38 Collier Bankr.Cas.2d 1235, 31 Bankr.Ct.Dec. 695,Bankr. L. Rep. P 77,526,97 Cal. Daily Op. Serv. 7845,97 Daily Journal D.A.R. 12,631,97 Daily Journal D.A.R. 15,641
In re: UNIVERSAL LIFE CHURCH, INC., a California non-profitcorporation, Debtor.UNIVERSAL LIFE CHURCH, INC., a California non-profitcorporation, Appellant,v.UNITED STATES of America, Appellee.In re: Universal Life Church, Inc., a California non-profitcorporation, Debtor.UNIVERSAL LIFE CHURCH, INC., a California non-profitcorporation, Appellant,v.UNITED STATES of America, Appellee.
Nos. 96-15122, 96-15123.
Argued and Submitted Aug. 14, 1997.Decided Oct. 6, 1997.Rehearing Denied Dec. 30, 1997.As Amended Dec. 30, 1997.
Edward O.C. Ord, Ord & Norman, San Francisco, CA, for appellant.
G. Patrick Jennings and Gary D. Gray, United States Department of Justice, Washington, DC, for appellee.
Appeals from the United States District Court for the Eastern District of California; Oliver W. Wanger, District Judge, Presiding. D.C. No. CV-93-05863-OWW.
Before: TASHIMA and THOMAS, Circuit Judges, and SEDWICK,* U.S. District Judge.
A religious organization seeks to have an Internal Revenue Service ("IRS") revocation of its tax-exempt status declared void as violative of bankruptcy's automatic stay. We hold that the IRS's administrative actions were permissible under the police and regulatory power exception to the automatic stay and affirm.
Universal Life Church, Inc. ("Church"), is a California nonprofit corporation. The IRS denied the Church's application for tax exempt status in 1969 and again in 1970 on the ground that the Church had engaged in activities outside the religious activities contemplated by I.R.C. § 501(c)(3). After paying the taxes and interest due for fiscal year ending April 30, 1969, the Church brought a suit for refund and prevailed. Universal Life Church, Inc. v. United States, 372 F.Supp. 770 (E.D.Cal.1974). The district court found that the contested activities (ordination of ministers, granting of church charters, and issuance of honorary doctorates) were not a substantial enough part of the Church's activities to justify denying the exemption. Id. at 775-76.
In 1984, the IRS revoked the Church's tax exempt status for the fiscal years ending April 30, 1978 through April 30, 1981. The Church brought a declaratory judgment action in the Court of Federal Claims with respect to its tax-exempt status for these years. The Court of Federal Claims upheld the revocation on the ground that the Church had not been operated solely for tax-exempt purposes as required by I.R.C. § 501(c)(3); it gave tax advice to its ministers and failed to control the non-exempt activities of its congregations. Universal Life Church, Inc. v. United States, 13 Cl.Ct. 567 (1987), aff'd, 862 F.2d 321 (Fed.Cir.1988).
The IRS began investigating the Church's tax exempt status for fiscal years ending April 30, 1982 through April 30, 1985. The Church filed a voluntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code on November 30, 1989. The Church then commenced an adversary proceeding under 11 U.S.C. § 505 to determine its federal and state liabilities for certain taxable periods between 1978 and 1990. In its complaint, the Church maintained that it was exempt from federal income taxes for the fiscal years ending April 30, 1978 through April 30, 1990.
The IRS revoked the Church's tax exempt status on January 8, 1991 for fiscal years ending April 30, 1982 through April 30, 1985. The revocation letter further stated that the Church was required to file federal income tax returns for these years, pursuant to I.R.C. § 6012. The total amount of taxes, with interest, is estimated by the Church to be in excess of six million dollars.
On July 20, 1993, the Church filed a motion in the adversary proceeding seeking a declaratory judgment that the IRS's revocation of the Church's tax exempt status was void as a violation of the automatic stay provided by 11 U.S.C. § 362(a). The Church also sought damages pursuant to 11 U.S.C. § 362(h).
The bankruptcy court denied the motion, holding that even if the revocation was an act that normally would have been stayed, it came within the exception under section 362(b)(4) for acts to enforce police or regulatory powers. The bankruptcy court also ordered the Church to file tax returns for the disputed tax years. The district court affirmed. The district court concluded that although revocation violated the automatic stay provision of section 362(a)(1), it fell within the exception provided by section 362(b)(4).
On appeal, a motions panel denied the IRS's motion to dismiss the appeal for lack of finality, and denied the Church's motion for stay of the returns order. We consolidated all pending issues for consideration on the merits.II.
The Church makes a persuasive argument that under Delpit v. Commissioner, 18 F.3d 768 (9th Cir.1994), the IRS's 1991 revocation of the Church's tax exempt status violated the automatic stay provided by 11 U.S.C. § 362(a). However, we need not reach this issue because the IRS's revocation of the Church's tax exempt status clearly falls within an exception to section 362(a). We thus begin our analysis by assuming, without deciding, that the IRS violated the automatic stay in this case.
Assuming a stay violation, our first inquiry must be whether