Source: http://openjurist.org/211/f3d/137
Timestamp: 2015-08-04 03:52:29
Document Index: 336402293

Matched Legal Cases: ['§ 501', '§ 170', '§ 508', '§ 508', '§ 2', '§ 3', '§ 3', '§ 6', '§ 7611', '§ 7611', '§ 7611', '§ 7611']

211 F3d 137 Branch Ministries and Dan Little, Pastor v. Charles O. Rossotti, Commissioner, Internal Revenue Service, | OpenJurist
211 F. 3d 137 - Branch Ministries and Dan Little, Pastor v. Charles O. Rossotti, Commissioner, Internal Revenue Service, Home
211 F3d 137 Branch Ministries and Dan Little, Pastor v. Charles O. Rossotti, Commissioner, Internal Revenue Service, 211 F.3d 137 (D.C. Cir. 2000)
Branch Ministries and Dan Little, Pastor, Appellantsv.Charles O. Rossotti, Commissioner, Internal Revenue Service, Appellee
No. 99-5097
Argued January 20, 2000Decided May 12, 2000
Appeal from the United States District Court for the District of Columbia(No. 95cv00724)
Mark N. Troobnick, with whom Jay Alan Sekulow and Colby M. May were on the briefs, argued the cause for appellants.
Thomas J. Sawyer, Attorney, U.S. Department of Justice, with whom Loretta C. Argrett, Assistant Attorney General, and Kenneth L. Greene, Attorney, U.S. Department of Justice, and Wilma A. Lewis, United States Attorney, were on the brief, argued the cause for appellee.
Richard P. Hutchison, Mark R. Levin and Janet LaRue were on the brief for amici curiae Landmark Legal Foundation and Family Research CouncilAyesha N. Khan, Elliot M. Mincberg and Alma C. Henderson were on the brief for amici curiae Americans United for Separation of Church and State and People for the American Way Foundation.
Before Silberman and Henderson, Circuit Judges, and Buckley, Senior Circuit Judge.
A. Taxation of Churches
The Internal Revenue Code ("Code") exempts certain organizations from taxation, including those organized and operated for religious purposes, provided that they do not engage in certain activities, including involvement in "any political campaign on behalf of (or in opposition to) any candidate for public office." 26 U.S.C. § 501(a), (c)(3) (1994). Contributions to such organizations are also deductible from the donating taxpayer's taxable income. Id. § 170(a). Although most organizations seeking tax-exempt status are required to apply to the Internal Revenue Service ("IRS" or "Service") for an advance determination that they meet the requirements of section 501(c)(3), id. § 508(a), a church may simply hold itself out as tax exempt and receive the benefits of that status without applying for advance recognition from the IRS. Id. § 508(c)(1)(A).
The IRS maintains a periodically updated "Publication No. 78," in which it lists all organizations that have received a ruling or determination letter confirming the deductibility of contributions made to them. See Rev. Proc. 82-39, 1982-1 C.B. 759, §§ 2.01, 2.03. Thus, a listing in that publication will provide donors with advance assurance that their contributions will be deductible under section 170(a). If a listed organization has subsequently had its tax-exempt status revoked, contributions that are made to it by a donor who is unaware of the change in status will generally be treated as deductible if made on or before the date that the revocation is publicly announced. Id. § 3.01. Donors to a church that has not received an advance determination of its tax-exempt status may also deduct their contributions; but in the event of an audit, the taxpayer will bear the burden of establishing that the church meets the requirements of section 501(c)(3).See generally id. § 3.04; Rev. Proc. 80-24, 1980-1 C.B. 658, § 6 (discussing taxpayers' obligations in seeking a ruling or determination letter).
The unique treatment churches receive in the Internal Revenue Code is further reflected in special restrictions on the IRS's ability to investigate the tax status of a church. The Church Audit Procedures Act ("CAPA") sets out the circumstances under which the IRS may initiate an investigation of a church and the procedures it is required to follow in such aninvestigation. 26 U.S.C. § 7611. Upon a "reasonable belief" by a high-level Treasury official that a church may not be exempt from taxation under section 501, the IRS may begin a "church tax inquiry." Id. § 7611(a). A church tax inquiry is defined, rather circularly, as
any inquiry to a church (other than an examination) to serve as a basis for determining whether a church
(A) is exempt from tax under section 501(a) by reasonof its status as a church, or
(B) is ... engaged in activities which may be subjectto taxation....
Id. § 7611(h)(2). If the IRS is not able to resolve its concerns through a church tax inquiry, it may proceed to the second level of investigation: a "church tax examination." In such an examination, the IRS may obtain and review the church's records or examine its activities "to determine whether [the] organization claiming to be a church is a church for any period." Id. § 7611(b)(1)(A), (B).
Branch Ministries, Inc. operates the Church at Pierce Creek ("Church"), a Christian church located in Binghamton, New York. In 1983, the Church requested and received a letter from the IRS recognizing its tax-exempt status. On October 30, 1992, four days before the presidential election, the Church placed full-page advertisements in USA Today and the Washington Times. Each bore the headline "Christians Beware" and asserted that then-Governor Clinton's positions concerning abortion, homosexuality, and the distribution of condoms to teenagers in schools violated Biblical precepts. The following appeared at the bottom of each advertisement:
This advertisement was co-sponsored by the Church atPierce Creek, Daniel J. Little, Senior Pastor, and bychurches and concerned Christians nationwide. Tax-deductible donations for this advertisement gladly ac-cepted. Make donations to: The Church at PierceCreek. [mailing address].
Appendix ("App.") at Tab 5, Ex. E.