Court Opinion

ID: 9638657
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:49:40.463641+00
Date Added: 2024-06-11T18:10:08.403345
License: Public Domain

MURRAH, Circuit Judge
(dissenting).
I cannot agree that the highly laudable and commendable purposes for which the Better Business Bureau is organized and *770operated are “exclusively educational”, as those words are used in the Social Security Act of 1935, as amended, c. 531, Title 8, Section 811(b) (8), 42 U.S.C.A'. § 1011(b) (8), and as those words are defined in Tr. Reg. No. 91, Art. 12. Neither can I agree that the rule of nontaxability generally applied to nonprofit sharing corporations applies to the question of the application of Social Security taxes under the exemption clauses, supra.
Tr.Reg. No. 91, Art. 12, provides in part as' follows: “An educational organization within the meaning of section 811(b) (8) of the Act is one designed primarily for the improvement or development. of the capabilities of ■ the individual, but, under exceptional circumstances, may include an association whose primary purpose is to give lectures on subjects useful to the individual and beneficial to, the community, even though an association of either class has incidental amusement features. * *”
It must be conceded that the organization was not one organized or operated as “one designed primarily for the improvement or development of the capabilities of the individual”. It then becomes necessary to determine whether there is presented “exceptional circumstances” so as to bring this organization within the very narrow limits of this exception. Organizations generally classified as business leagues, chambers of commerce, civic leagues, and trade associations have consistently been exempt from income tax because they are not organized for profit. Having no profit motive, except the furtherance of the aims of those sponsoring the same, they can have no taxable income, but they are not exempt from the Social Security tax, and as stated in the majority opinion, likewise religious, charitable, scientific, literary and educational organizations, not operated for the profit of any private shareholders or individuals, are consistently exempt from taxation and the rule exempting such organizations from taxation is generally given a liberal construction in order to further, rather than to hinder their beneficient purposes.
In my opinion, the question of whether or not such an organization is exempt from Social Security taxes, turns upon an entirely different ground, based upon entirely different considerations. Here, the incidence of the tax is not upon the realization of income, but upon “employment”. “For the purpose of the exception the nature of the service is immaterial; the statutory test is the character of the organization for which the service is performed.” Tr.Reg. 91, Art. 12.
When viewed in a broad sense, the purposes, activities, and functions of the Bureau partake of education and learning, in that it imparts information to the uninformed; the ignorant are enlightened; the unsuspecting are warned; the deceiver is exposed, and the evils of fraud are corrected. For these services no one receives a pecuniary benefit and no one is paid a fee. Yet, when viewed in its more narrow and restricted sense, and as measured by the words of the statutory exemption, in my opinion, it falls short of the rule which requires strict adherence in order to come within its protective provisions and I cannot ascribe to it the exclusiveness necessary to its exemption.
For these reasons, I respectfully dissent.