Court Opinion

ID: 770156
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:31:08+00
Date Added: 2024-06-11T17:55:48.257841
License: Public Domain

224 F.3d 627 (7th Cir. 2000)
United States of America, Plaintiff-Appellee,v.Indianapolis Baptist Temple, Defendant-Appellant.
No. 00-1102
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 11, 2000
Decided August 14, 2000

Appeal from the United States District Court  for the Southern District of Indiana, Indianapolis Division.  No. IP98-0498 C-B/S--Sarah Evans Barker, Chief Judge.
Before Coffey, Evans, and Williams, Circuit Judges.
Williams, Circuit Judge.

1
The members of  Indianapolis Baptist Temple (IBT) believe it to  be a sin for their church to pay taxes.  Accordingly, since at least 1987, IBT has paid  none of the federal employment taxes for which it  is responsible. After attempts to secure payment  of the taxes due through 1993 failed, the  government filed suit against IBT to recover the  amount owed. Unpersuaded by IBT's various  defenses, the district court granted the  government summary judgment. IBT now appeals on  the ground that the religion clauses of the First  Amendment protect it from liability. We affirm.

2
* IBT was founded in 1950 and operated as a not-  for-profit corporation until 1983, when it began  operating as a unincorporated religious society.  In 1986, IBT renounced its status as an  unincorporated religious society, opting instead  to define itself as a "New Testament Church,"  based on its belief that the exclusive  sovereignty of Jesus Christ over the church  required it to disassociate itself from secular  government authority. Around the same time, and  for the same reason, IBT also stopped filing  federal employment tax returns and paying the  federal employment taxes for which it was  responsible.

3
There are three federal employment taxes--the  social security tax, the medicare tax, and the  normal income tax. Employers must pay half of the  applicable social security and medicare taxes and  must withhold from employees' wages the other  half of the applicable social security and  medicare taxes, as well as all of the applicable  normal income tax. 26 U.S.C. sec.sec. 3102(a),  3111(a), (b), 3402. Employers are liable for both  the taxes imposed directly on them and the taxes  they are required to withhold from employees. 26  U.S.C. sec.sec. 3102(b), 3111(a), (b), 3403.  Since sometime before 1987, IBT has paid none of  these taxes.

4
Eventually, the Internal Revenue Service (IRS)  contacted IBT about its failure to file  employment tax returns, but IBT offered no  indication that it would file returns. As a  result, in early 1994, the IRS prepared quarterly  returns for IBT beginning in 1987 and continuing  through 1993. The IRS then sent the forms to IBT  so that IBT could check the accuracy of the  amounts on the returns, but IBT submitted no  corrections. After the time for submitting  corrections had passed, the IRS calculated an  assessment of tax, interest, and additions  totaling $3,498,355.62 and sent a notice and  demand for payment to IBT.

5
When the assessment went unpaid, the government  filed suit against IBT seeking to reduce the  assessment to a judgment and to initiate  foreclosure proceedings against two parcels of  real estate owned by IBT. In defense of its  failure to pay, IBT argued that the tax  assessments at issue were not properly made  against it and that the religion clauses of the  First Amendment protect it from liability. On  cross-motions for summary judgment, the district  court rejected both of IBT's arguments and  awarded the government the relief it sought. IBT  now appeals, but only on the ground that the  First Amendment's religion clauses prevent the  government from taxing it.

II

6
IBT challenges the district court's decision on  the grounds that both the Free Exercise and  Establishment Clauses of the First Amendment, as  well as general principles of religious liberty  embodied in the First Amendment, protect it from  having to pay taxes. As with all appeals from  decisions granting summary judgment, we review  the district court's decision de novo, construing  the evidence and the inferences drawn from it in  the light most favorable to the non-moving party.  Curran v. Kwon, 153 F.3d 481, 485 (7th Cir.  1998).

A.  Free Exercise Clause

7
IBT contends that the federal employment tax  laws, as applied to it, violate the Free Exercise  Clause of the First Amendment by requiring the  church to act in a manner inconsistent with its  beliefs. Specifically, IBT alleges that complying  with the federal employment tax laws would  require it to recognize the sovereignty of the  federal government over the church, something  that would be inconsistent with its belief in the  exclusive sovereignty of Jesus Christ over the  church. In IBT's view, the Free Exercise Clause  grants it a right to act in accordance with its  beliefs, notwithstanding contrary federal law.

8
The Free Exercise Clause absolutely protects the  freedom to believe and profess whatever religious  doctrine one desires. Employment Div., Dep't of  Human Resources v. Smith, 494 U.S. 872, 876-77  (1990); Sherbert v. Verner, 374 U.S. 398, 402  (1963). It also provides considerable, though not  absolute, protection for the ability to practice  (through the performance or non-performance of  certain actions) one's religion. Smith, 494 U.S.  at 877-78; Church of the Lukumi Babalu Aye, Inc.  v. City of Hialeah, 508 U.S. 520, 546-47 (1993).  Significantly, however, neutral laws of general  application that burden religious practices do  not run afoul of the Free Exercise Clause. Smith,  494 U.S. at 878-85.

9
IBT does not (and, in any event, could not)  contest the government's characterization of the  federal employment tax laws as neutral laws of  general application. Those laws are not  restricted to IBT or even religion-related  employers generally, and there is no indication  that they were enacted for the purpose of  burdening religious practices. Contrast Church of  the Lukumi Babalu Aye, 508 U.S. at 531-45  (concluding that laws forbidding a particular  religion's animal sacrifices were neither neutral  nor generally applicable). Accordingly, IBT's  Free Exercise challenge to the federal employment  tax laws must be rejected.

10
IBT, however, argues from the premise that this  conclusion does not follow directly from the fact  that the federal employment tax laws are neutral  laws of general application. Rather, IBT proceeds  as though the Religious Freedom Restoration Act  (RFRA), 42 U.S.C. sec. 2000bb-1 et seq., somehow  overturned the Supreme Court's decision in Smith-  -that neutral laws of general application cannot  be attacked on Free Exercise grounds--and  reinstated the pre-Smith standards for evaluating  Free Exercise challenges. RFRA did not (and could  not) do this. See City of Boerne v. Flores, 521  U.S. 507, 516-20, 535-36 (1997). RFRA simply  established an independent statutory regime  essentially prohibiting the enforcement of laws  that cannot satisfy the pre-Smith standards.1

11
Even if IBT's misguided attempts to invoke RFRA  as a constitutional standard are construed  generously as an effort to seek relief on  statutory grounds, IBT's challenge to the federal  employment tax laws must still be rejected. Under  RFRA, laws that substantially burden the free  exercise of religion cannot be enforced unless  the burden furthers a compelling government  interest and is the least restrictive means of  furthering that interest. 42 U.S.C. sec. 2000bb-  1. In several pre-Smith Free Exercise challenges  to the application of federal tax laws, the  Supreme Court and various courts of appeals  concluded both that maintaining a sound and  efficient tax system is a compelling government  interest and that the difficulties inherent in  administering a tax system riddled with judicial  exceptions for religious employers make a  uniformly applicable tax system the least  restrictive means of furthering that interest.  See Hernandez v. Commissioner, 490 U.S. 680, 698-  700 (1989) (challenge to federal income tax);  United States v. Lee, 455 U.S. 252, 258-60 (1982)  (challenge to social security tax); South Ridge  Baptist Church v. Industrial Comm'n, 911 F.2d  1203, 1206-10 (6th Cir. 1990) (challenge to  premiums required by workers' compensation  program); Bethel Baptist Church v. United States,  822 F.2d 1334, 1338-39 (3d Cir. 1987) (challenge  to social security tax). The cases that have been  decided under RFRA reach the same conclusion. See  Browne v. United States, 176 F.3d 25, 26 (2d Cir.  1999) (challenge to federal income tax); Adams v.  Commissioner, 170 F.3d 173, 175-80 (3d Cir. 1999)  (same); Droz v. Commissioner, 48 F.3d 1120, 1122-  25 (9th Cir. 1995) (challenge to social security  tax). We find this authority persuasive and see  no reason to reach a different conclusion.

12
IBT, however, claims that the cases we have  cited can be distinguished on factual grounds as  each involved a state-recognized legal entity,  whereas IBT is simply a "New Testament Church."  But, none of these cases, expressly or  implicitly, rely on the fact that the entities  involved were state-recognized, nor does such a  distinction have any logical connection to the  relevant legal standards. Accordingly, we  conclude that RFRA provides no basis for  sustaining IBT's challenge to the federal  employment tax laws.

B.  Establishment Clause

13
IBT contends that applying the federal  employment tax laws to it violates the  Establishment Clause of the First Amendment by  deeply involving the government in the internal  affairs of the church. In IBT's view, the payment  and withholding obligations imposed by these  laws, as well as the enforcement proceedings that  have resulted from IBT's refusal to comply with  these laws, require a constitutionally  impermissible amount of government involvement in  church affairs.

14
The Establishment Clause prohibits government  sponsorship of, financial support for, and active  involvement in religious activities. Jimmy  Swaggart Ministries v. Board of Equalization, 493  U.S. 378, 393 (1990); Walz v. Tax Comm'n, 397  U.S. 664, 668 (1970). However, total separation  of church and state is not required. Walz, 397  U.S. at 668-72. If a statute has a secular  purpose and it has a primary effect of neither  advancing nor inhibiting religion, it will be  upheld. Mitchell v. Helms, 120 S. Ct. 2530, 2540  (2000) (plurality opinion); Agostini v. Felton,  521 U.S. 203, 232-33 (1997).

15
IBT concedes that the federal employment tax  laws have a secular purpose and only contends  that the laws have a primary effect of inhibiting  religion to the extent that they foster excessive  government entanglement with religion. Cf.  Agostini, 521 U.S. at 233 (listing excessive  entanglement as one of three primary factors to  be considered in evaluating the effect of a law  for Establishment Clause purposes). In support of  its excessive entanglement argument, IBT relies  exclusively on Walz v. Tax Commission, which  upheld a property tax exemption for houses of  worship against an Establishment Clause  challenge, reasoning in part that removing the  exemption would likely create greater government  entanglement (through property valuations, tax  liens, tax foreclosures, etc.) than leaving it in  place would. 397 U.S. at 674. IBT claims that  Walz thus implies that taxing religious  organizations (and all that goes with taxing such  organizations) fosters unconstitutionally  excessive government entanglement.

16
We cannot accept IBT's reading of Walz. While  taxing religious organizations involves greater  government entanglement than not taxing them  does, this greater entanglement is not  necessarily unconstitutionally excessive. In  fact, the Supreme Court has held that the sorts  of generally applicable administrative and record  keeping requirements imposed by tax laws may be  imposed on religious organizations without  violating the Establishment Clause. See Jimmy  Swaggart Ministries, 493 U.S. at 394-97 (state  sales and use tax); Hernandez, 490 U.S. at 695-98  (federal income tax); see also South Ridge  Baptist Church, 911 F.2d at 1210 (workers'  compensation program); Bethel Baptist Church, 822  F.2d at 1340-41 (social security tax). The normal  incidents of collecting federal employment taxes  simply do not involve the intrusive government  participation in, supervision of, or inquiry into  religious affairs that is necessary to find  excessive entanglement. See Jimmy Swaggart  Ministries, 493 U.S. at 394-96; Hernandez, 490  U.S. at 696-98. Even the somewhat more intrusive  tax foreclosure ordered in this case is a  discrete event involving no inquiry into  religious matters and, as such, raises no  excessive entanglement concerns. Accordingly,  there is no merit to IBT's Establishment Clause  challenge to the federal employment tax laws.

C.  Other Arguments

17
Finally, IBT makes a pair of arguments that  rely on what it contends are the general  principles behind the religion clauses of the  First Amendment. First, IBT argues that applying  general regulatory laws to it would abridge the  religious liberty guaranteed by the religion  clauses. As noted above, however, there is no  basis under either the Free Exercise Clause or  the Establishment Clause for the argument that  neutral, generally applicable, minimally  intrusive tax laws (like the ones at issue here)  cannot be applied to religious organizations. IBT  asserts that Church of the Holy Trinity v. United  States, 143 U.S. 457 (1892), and Corporation of  the Presiding Bishop of the Church of Jesus  Christ of Latter-day Saints v. Amos, 483 U.S. 327  (1987), are to the contrary, but it is mistaken.  In Holy Trinity, the Court declined to interpret  an immigration statute to prohibit the  immigration of a Catholic priest, in part on the  ground that it believed it unlikely that Congress  would have intended such a prohibition in light  of the nation's strong religious tradition. 143  U.S. at 465-72. The case had nothing to do with  the constitutionality of general regulatory laws,  and there is no question in this case regarding  the intended scope of the federal employment tax  laws. In Amos, the Court upheld against an  Establishment Clause challenge an exception for  religious organizations to Title VII's  prohibition on religious discrimination in  employment. 483 U.S. at 334-39. Just as with the  property tax exemption in Walz, however, the fact  that the Establishment Clause allows exceptions  for religious entities does not mean that such  exceptions are required. Put simply, applying  neutral, generally applicable, minimally  intrusive tax laws to religious entities does not  unconstitutionally abridge the religious liberty  guaranteed by the First Amendment.

18
Second, IBT takes issue with the district  court's characterization of it as an  unincorporated religious society under Indiana  law. IBT contends that it is a "New Testament  Church," not an unincorporated religious society,  and that by characterizing it as such an entity,  the district court "established" a state church  and imposed on IBT a form of worship contrary to  its beliefs. The district court did neither of  these things. It simply described the legal (not  religious) nature of an already existing church.  In any event, it does not matter what sort of  entity IBT is. Whatever it is, it must comply  with the federal employment tax laws. Thus, IBT's  objection to the district court's  characterization of it is both without merit and  beside the point.

III

19
IBT's challenges to the application of the  federal employment tax laws to it are without  merit. Accordingly, we Affirm the judgment of the  district court.

Note:

1
 We are aware that the constitutionality of RFRA  as applied to the federal government is not  without doubt. Contrast City of Boerne, 521 U.S.  at 536-37 (Stevens, J., concurring) (suggesting  that RFRA is unconstitutional under the  Establishment Clause), with Christians v. Crystal  Evangelical Free Church (In re Young), 141 F.3d  854 (8th Cir.) (upholding RFRA against an  Establishment Clause challenge), cert. denied,  525 U.S. 811 (1998). However, as the government  does not contest the law's constitutionality  here, we will assume the law is constitutional.  See Adams v. Commissioner, 170 F.3d 173, 175 (3d  Cir. 1999).