Document: 416 U.S. 752 94 S.Ct. 2053 40 L.Ed.2d 518 Donald C. ALEXANDER, Commissioner of Internal Revenue, Petitioner,v.'AMERICANS UNITED' INC. No. 72—1371. Argued Jan. 7, 1974. Decided May 15, Syllabus Repondent, a nonprofit corporation, had ruling letter assuring it tax-exempt status under § 501(c)(3) the Revenue Code 1954 (Code). The Service (IRS) revoked on ground that respondent violated lobbying proscriptions §§ and 170 Code, effect which was to render liable for federal unemployment taxes terminate its eligibility tax-deductible contributions. Respondent two benefactors brought this action seeking declaratory judgment IRS' administration provisions 501(c) (3) erroneous or unconstitutional injunctive relief requiring reinstatement status. District Court dismissed complaint ground, inter alia, barred by prohibition in 7421(a) against suits 'for purpose restraining assessment collection any tax.' Appeals agreed could not be maintained but held respondent's suit grounds raised constitutional allegations; primary design enjoin own taxes; contributors only 'collateral effect' suit; absence would sustain irreparable injury there no adequate legal remedy. court consequently affirmed dismissal as reversed respondent. Held: is 7421(a). Enochs v. Williams Packing & Navigation Co., 370 1, 82 1125, 8 292; Bob Jones University Simon, 725, 2038, 496. Pp. 758—763. (a) nature taxpayer's claim, distinct from probability success, consequence 759—760. (b) That irrelevant, bars anyone's taxes. P. 760. (c) Under reasonable construction statutory term 'purpose,' objective restrain contributors, being restore advance assurance donations qualify charitable deductions donors. 760—761. (d) An refund taxes, even if successful, will lead recovery contributions lost interim between withdrawal final adjudication entitlement This is, however, merely form injury, itself insufficient avoid bar 761—762. (e) afford full opportunity litigate legality letter, since liability such hinges precisely same issue does 170, i.e., 762. 155 U.S.App.D.C. 284, 477 F.2d 1169, reversed. Scott Crampton, Washington, D.C., petitioner. Alan B. Morrison Franklin Salisbury, respondents. Mr. Justice POWELL delivered opinion Court. 1 nonprofit, educational corporation organized laws Columbia 'Protestants Other Americans United Separation Church State.' Its defend maintain religious liberty States dissemination knowledge concerning principle separation church State. In 1950, issued qualified organization predecessor provision (the Code), 26 U.S.C. (3).1 As result, treated 170(c)(2) 170(c)(2).2 situation continued unchanged until April 25, 1969, when revoking 1950 170(c)(2)(D) devoting substantial part activities attempts influence legislation. Shortly thereafter, another exempting income taxation 'social welfare' 501(c)(4), 501(c)(4).3 change (FUTA) 3301, 3301,4 destroy 170. 2 Because 1969 caused decrease contributions, initiated instant July 30, 1970.5 They sought Service's unconstitutional6 letter. their objections included facial challenge constitutionality statutes,7 they also requested convening three-judge district pursuant 28 2282. 3 moved dismiss action, principally exception Declaratory Judgments Act cases 'with respect Federal taxes,'8 Anti-Injunction tax,'9 ousted subject-matter jurisdiction. accepted argument, refused convene court, an unpublished order filed March 9, 1971. Circuit insofar pertained individual plaintiffs, remanded case with instructions court. 'Americans United' Inc. Walters, 1169 (1973). petitioned review, we granted certiorari. 412 927, 93 2752, 37 154 We reverse. 4 our 496, examined meaning interpretation prior opinions Court, reaffirmed adherence two-part test announced 292 (1962). To reiterate, unanimously pre-enforcement injunction may (i) 'if clear circumstances Government ultimately prevail . .,' id., at S.Ct., 1129, (ii) equity jurisdiction otherwise exists.' Ibid. Unless both conditions are met, preventive must dismissed. 5 recognized controlling precedent coplaintiffs them. U.S.App.D.C., 292, F.2d, 1177. plaintiffs 'relate(d) directly taxes' allegations infringements rights were 'to avail' overcoming barrier Id., 291, 1176. satisfy criteria, 298, 1183, concluded without scope therefore subject test.10 6 court's conclusion regard rested confluence several factors. One claims. noted, thrust argument qualifies exemption existing law rather provision's 'substantial part' proscription efforts legislation unconstitutional. 293, 1178. Obviously, observation have been dispositive Appeals, factor differentiate respondent, allowed sue, coplaintiffs, who likewise pressed claims action. Furthermore, decisions make unmistakably Act. E.g., Bailey George, 259 16, 42 419, 66 L.Ed. 816 (1922); Dodge Osborn, 240 118, 36 275, 60 557 (1916). 7 other three factors identified equally unpersuasive. First, noted 'does seek lawsuit taxes.' volunteered pay FUTA obtained restoring status, observation, assume, correct. It irrelevant. Section attempt his Rather, declares sweeping terms 'no tax shall person, whether person whom assessed.'11 Thus triggers literal Perhaps real point about set stage more pertinent 'at best collateral arose 'in posture removed restraint collection.' 294, 1179. disagree. contributors. obvious reduce level donors.12 Indeed, interested obtaining did effectively think circular conclude, 'primary design' remove burden those presently contributing disposition contributed funds away corporation.' latter goal restatement former can accomplished contravention 9 Finally, emphasized 'alternate remedy litigation ..' 295, 1180. recognized, course, alternative statement 'it certain and, feel, so far mainstream hardly considered adequate.' 294 n. 13, 1179 13. import these comments unclear. If taken mean practical matter inadequate exemption, certainly accurate. This, essential prerequisite traditional equitable standards one test. Jones, supra, U.S., 745—746, 2050—2051, allowing basis showing alone quite meaningless. 10 If, hand, inadequacy interpreted lacks finally adjudicated law, inaccurate. Respondent's namely And following payment Christian Echoes National Ministry, States, 470 849 (C.A.10, 1972), cert. denied, 414 864, 41, 38 84 (1973).13 11 conclude valid reasons distinguish purposes exempt dual requirements enunciated case.14 12 ordered. 13 Judgment 14 DOUGLAS took decision case. 15 BLACKMUN, dissenting. 16 Finding myself solitary dissent 'tax' case, I am somewhat diffident expressing views contrary apparently has reached easily. do because disturbingly aware overwhelming power Service. mere exercise often freezes endanger existence philanthropic organizations public benefits secure, path judicial review discouragingly long expensive. wrote primarily, therefore, express what feel needed word caution governmental where means unfavorable unsatisfactory best. 17 * (AU) 1948. For almost 18 years AU formally 1954, 501(c)(3),1 predecessor, 101(6) 1939. On 1968, AU's letter-ruling longer met instead, 'action' organization, within definition Treasury Regulations 1.501(c)(3)—1(c)(3)(i) (iv), devoted pursuit App. 7—10. loss result becoming tax. civic league 501(c)(4) application.2 19 nevertheless, distinctly adverse respects. A contribution deductible donor 170(a)(1) (c)(2)(D) (c)(2)(D), closely parallels identical 501(c)(3). much less concern, became 3301 therefrom 501 limited 3306(c)(8) 3306(c)(8).3 paid taxes,4 stipulated continue so. 20 revocation donors declined sharply first time able raise enough cover expenses. then present suit.5 alleged substantiality created disparity large small organizations; punitively; penalize First Amendment activity manner; 501(c)(3)'s 'substantial' 'propaganda' unconstitutionally vague. IRS Cumulative List Organizations (c)(2)(D). II 21 Act, 7421(a), reads part: 22 '(N)o assessed.' 23 considering two-step analysis necessary: (1) When statute apply? (2) applicable, permitted? seems me overlooks question apply mechanically criteria application 24 threshold question, obviously, 'suit restraining' conceded none regardless outcome litigation. paid, pay, assumption FICA frozen cannot now terminated. 25 context fixed all taxes—income, unemployment, FICA—that 'the purpose' litigation, ascertained. asserts determine concerned. surely concede that, statute's words, assure continuance utilized operations. attribute Congress, simplistic enable circumvent subjective protestation sought. ascertain legislative intent, necessary consider well thus bring into analysis. See Recent Development, 73 Col.L.Rev. 1502, 1508—1510 27 Connally, 472 903, 906 (1973), Fourth 'would potentially greater revenues,' prevent tax, applicable. Thus, 'purpose' equated ultimate effect, Crenshaw County Private School Foundation 474 1185, 1188 (C.A.5 1973), pet. pending 73—170, similar focus. different approach: 'The upon 293—294, 1178—1179. 29 view, applicability depends direct plaintiff system whole. 30 here inhibit AU. highly speculative all, possibly revenue. assertion dried up accepted, suspect be, presume erstwhile found objects bounty, whose names remain vitally important List. nothing than possible revenues involved, Court's wide-ranging today, me, too attenuated encompassed intendment phrase, 31 (1962), observed object 'is withdraw courts entertain injunctions prohibiting taxes,' permit assess collect due intervention, require right disputed sums determined refund.' 1128 1129. There undoubtedly appropriate concern underlying danger multitude spurious suits, merit, interrupt free flow jeopardize Nation's fiscal stability. See, e.g., State Railroad Tax Cases, 92 575, 613—614, 663 (1876); Cheatham 85, 89, 561 (1876). Certainly, precollection threaten planning budgeting But perceive how desired interferes area Any potential increase contribute thereby obtain deduction best, minor neither significant nor controlling. I, accept 'direct plaintiff' component ascertainment true suit, reach 32 wish indicate disapproval Packing. taxpayer jurisdiction, assertedthat thrown bankruptcy required challenged. carefully situations central inapplicable attempted enjoined.' sure, narrowly confined exceptions instances suffer 'clear prevail.' 'manifest statute—to intervention—is 'inapplicable.' made element, addition considerations previously spelled out Miller Standard Nut Margarine 284 498, 52 260, 76 422 (1932), 33 Packing, facts, clearly distinguishable social security allegedly past taxpayer. Here avowed restoration incidence challenged prospective claimed injunction. Nothing remotely resembling here. read broadly today restrictive Congress intended. becomes absolute injunctions, irrespective liability, character 34 further consideration. Arguably, intended produce revenue but, rather, accomplish broad-based policy through medium taxation, inappropriate.6 designed money.7 purpose, truly continuation bestow.8 35 Another very deserving consideration hazard vesting virtual plenipotentiary over organizations. Although little Commissioner, 7805(a) 7805(a), properly vested broad powers 'prescribe needful rules regulations enforcement' laws, suggests he fully insulated effectuating policy. charged treatment provision. These peculiarly province Executive's administrative officers. makes claim kind precluded determination concludes merits. reached, mercy period time—usually one—it takes work way adjudicative process guise myriad pitfalls. route paid.9 Part III, infra. University, 729 730, 2042, acknowledges 'appearance successful fund raising most organizations.' program ruling, tantamount licensing procedure. Commissioner's authority requirement part,' 'charitable,' abuse.10 concerned, appears circumscribe unfettered Commissioner.11 subscribes particular brand happens advocating (a merits evaluate), should operate fickle fashion. Surely, instance concern. extent determinations reposed Service, checks balances provided before favored imperiled direction appeared seeks illegal removal de minimis injunction, my III 39 Concluding, have, AU, appropriate. inquiry independent applies, outside field. example, Public Comm'n Wycoff 344 237, 241, 236, 238—239, 97 291 (1952); Beacon Theatres, Westover, 359 500, 506—507, 79 948, 954, 988 (1959). vigorous pressing irreparably injured receive deduction, completely unrecoverable opinion, ante, 761—762, fact here, just presence virtually inevitable. Even satisfies condition granting relief. 906. show law. Wilson Shaw, 204 24, 31, 233, 234, 51 351 (1907). usually remedies, adequate: accommodation selected testing 41 contend available. received retains Whenever available, availability indicates available election 3121(k)(1)(A) irrevocable. 3, supra. conceivably might taxes,12 one, effective issues involved. 43 authorized 7422 7422, limitations imposed 6532(a), geared technical aspects larger issues. At most, artificial vehicle adjudicate questions refund; focus doubtful, also, favorable possessing reliability ruling. Assuming see (CA.10 (1973),13 obstacles path. 44 filed. 7422. annual basis; thus, expiration year paid. 6532(a)(1), usual, precludes denied six months passed date filing. Once instituted, least days answer complaint. optimum cooperation, minimum achieve revocation.14 delay wins appeal taken. follows, resolution drags on. Echoes, 1966 1973. While perhaps expected, endured, ordinary magnitude defeats adequacy organization's stake. 45 still hazards. issue, inadvertently intentionally refund. unlikely, sound warrant expense contest amount vital profound precedents Scientology 485 313 (C.A.9 illustrates Government's effort win made. Mitchell Riddell, 402 842 1968), 394 456, 89 1223, 415 (1969). doubt possesses moot chooses agree like bad faith, Brief Petitioner impossible prove faith where, sum minimal inadvertence reason 46 Additionally, eventual victory goal. asserted 'normal practice prevailed suit,' Reply 34—35, 31. Still, Exemption Organizations, handbook states: 47 'An obtains holding file establish recognize subsequent involved decision.' Department Treasury, Manual, XI, c. (11) 671, 270. 48 Whatever internal published procedures cast serious resolve urgent problem. application, whereas operates retrospectively pleadings proof applicable permit.15 uncertain. faced dilemma choosing so-called pre-assessment says bring, decides correctness year's (which concern). 49 staged 'friendly' suggestion. donor's suffers problems. off establishes deduction. mooted. Moreover, accommodating assert interests. Could equal protection determined? Not rely contributor it, find willing undertake task strains largesse extreme, particularly routine audit return. 50 course harmed vindicate claims.16 inappropriate. IV last amended presented justifying Ex parte Poresky, 290 32, 54 4, 78 152 (1933), restated Goosby Osser, 409 512, 518, 854, 858, Hagans Lavine, 528, 542—543, 1372, 1381—1382, 577 (1974). said possibility success merit yet frivolous foreclosed denial 2282 motion.' 1183. differ determination. imply controversy. 53 Since join reversal Appeals' judgment, respectfully dissent. describes virtue 501(a): 'Corporations, community chest, fund, foundation, operated exclusively religious, charitable, scientific, safety, literary, purposes, prevention cruelty children animals, net earnings inures benefit private shareholder individual, carrying propaganda, attempting, legislation, participate in, intervene (including publishing distributing statements), political campaign behalf candidate office.' 23(o)(2) defines 'charitable contribution' 170(a), provision, gift use of: 'A trust, foundation— '(A) possession thereof, State, Columbia, States; '(B) animals; '(C) individual; '(D) differences lists qualifying 501(a) taxes: 'Civic leagues profit promotion welfare, local associations employees, membership employees designated persons municipality, educational, recreational purposes.' 3306(c)(8), 3306(c)(8). began paying February 1970 stated willingness light relatively insubstantial reports $981.13 $1,052.60 1970, $889.09 1971, $1,131.36 1972. 2. Ordinarily, shift meant become (FICA) not. 3121(b)(8)(B), 3121(b)(8) (B). distinction voluntarily elected although eight years, rendered incapable terminating retained 3121(k)(1)(D), 3121(k)(1)(D). founded 1331 1340 Administrative Procedure 701—706. five claims: them restrictions advocacy contributors; conflict Due Process Clause Fifth Amendment, engage quantum smaller amounts enabled churches favor government aid schools bear opposition, violating plaintiffs' Establishment Free Exercise Clauses Amendment; (4) lacking specificity constituted invalid delegation Service; (5) acted arbitrarily capriciously exemption. contentions advanced Appeals. centered 'discriminatory' above (2). Specifically, clauses severed remainder section declared 2201: 'In actual controversy except filing pleading, declare relations party declaration, declaration force decree reviewable such.' (Emphasis added.) (Income Assessment) forth 7421(a): 'Except sections 6212(a) (c), 6213(a), 7426(a) (1), None relevant 'except clause 8, coterminous ban tax' despite broader phrasing take position event hold occasion deal separately former. 732—733, 2044, 7. portion beginning 'by person' added 1966. 731—732, 2043, 6. there, phrase reaffirms plain original language Alternatively, reassure foundations risk 4945(d)(5), 4945(d)(5). respect, foundations. challenging imposition via alter conclusion. procedure forgoing it. Graham Du Pont. 262 567, 67 965 (1923). distinguished petitioner theory termination not, given established Refund (or FICA) fungible context. So nature, follows actions 748 22, 2051 need decide range remedies which, unlike congressionally procedures. reading compelled apparent congressional statute. consequences regime harsh indeed, BLACKMUN ably articulates dissenting today. 749—750, 2052, meriting 1939 1950. follows: 501. corporations, trusts, etc. '(a) taxation. described subsection subtitle unless 502 503. '(c) referred (a): '(3) Corporations, relates to: '(4) Civic Although, 3121(b)(8)(B) (B), Insurance Contributions 501(c)(3), so, privilege 3121(k)(1)(A), 3121(k)(1)(A). Termination responsibility requires years' written notice effected after subjected more. 3121(k) (1)(D). taxed years. unable organization. 1969; 1970; 1971; latter, such, needed. Accordingly, concerned 2201—2202, provides jurisdictional general reaching companion exist 2201 co-terminous doctrine sovereign immunity agree. 1180, falls doctrine's Dugan Rank, 372 609, 621—622, 622, 83 999, 1007, (1963): '(1) officers beyond though authority, themselves manner exercised constitutionally void.' Here, administers manner. Green 330 F.Supp. 1150 (D.C.1971), officials comparable Inasmuch defense jurisdictional, Sherwood, 312 584, 586, 61 767, 769, 85 1058 (1941), summary affirmance sub nom. Coit Green, 404 997, 564, 550 (1971), affords precedent. Some endorsed approach. McGlotten 338 448 (D.C.1972), enjoin, among things, excluded nonwhites membership, Chief Judge Bazelon, writing stated: 'Plaintiff's He limit collectible States. (of statute) inapplicable.' 453—454 (footnotes omitted). (D.C.), aff'd per curiam mention specifically permitted relief; 907—908 (CA4 1973) (dissenting opinion). 'taxes' penalty Hill Wallace, 44, 453, 822 Lipke Lederer, 557, 549, 1061 (1922), rejected, well, contention regulatory opposed measure. Sonzinsky 300 506, 57 554, 81 772 (1937). relies enjoined. All situations, common absent suit: act collecting owes. Alexander spoke remarks American Society Association Executives New Orleans August 29, 1973: recognizes administered special place Their guardian. insure assets put approved uses contemplated calls extraordinary degree care judgment.' BNA Daily Report, Aug. 1973, p. J—1. value balanced revenue-raising objectives laws. weighed balance reflected 1965 Report Foundations: 'Private possess characteristics modern necessarily lacks. many-centered, superstructure, readily control individuals widely diversified Such give great initiate thought experiment new untried ventures, prevailing attitudes, quickly flexibly. Precisely controlled single group, evoke intensity interest dedication energy. values, themselves, justify exemptions activity. play philanthropy. foundation development, ancient vintage. Like antecedent, permits commit gives charity. ways, enriched strengthened pluralism order. preserved fluidity impetus structure Operating tend defined patterns. foundations, frequently commitment specific operating programs projects; freedom relative ease financial support another. ventures assisted, areas explored, concepts developed, causes advanced. unique flexibility, then, constitute powerful instrument evolution, growth, improvement shape charity.' Senate Committee Finance, 89th Cong., 1st Sess., 12—13 (Comm.Print 1965). states majority revoked. 22. 'propaganda,' words employed draws conclusions terms. arrived solely construing pari materia. idiosyncrasies 'charitable' engrafted upon, entwined with, 'organized purposes' standard nowhere statute, product discretionary interpretation. 740, 2047, reflects 'a good-faith enforce laws,' motive inapplicable. doubtful determining laws.' Is innovation requirements? threat revoke university's good rests proposition institution comply government-approved admission standards? assumes ready suit. Ante, 762—763 curious, earlier stages suggested, apparently, main briefing Tr. Oral Arg. 36—37. noteworthy discussing problem Thrower 'There quick present. deny having deductibility either create taxable litigable guinea pig contribution, disallowed, disallowance.' Thrower, Considering Far Reaching Changes Ruling Exempt J. Taxation 168 (1971). Whether procedurally feasible some indication practice. sued aggregate exceeding $103,000 seven recover challenges basic arguments. suggestion Echoes' contributions; this, importance. Former article cited above, come arises. tried.' 168. 7421: 'This extremely unfortunate reasons. offends sense justice undue needs prompt decision. Second, finality want Third, inhibits growth body interpretive guide deliberations.' Note, Procedural Limitations Suspension Advanced Assurance Deductibility, S.Cal.L.Rev. 427 (1974), detailed discussion hearing. suggested supported commentators addressed decided Courts Constitutional Implications Withdrawal Benefits From Segregated Schools, Md.L.Rev. 51, (1973); Loss Privileged Status Suits Restrain Assessments, Wash. Lee L.Rev. 573, 590 Comment, Avoiding Statute Enjoin Tax-Exempt Status, Wm. Mary 1014, 1025 1513—1514 Notes, Temp.L.Q. 596, 601

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