Adams Lippincott v. Comm IRS ( 1999 )


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  •                                                                                                                            Opinions of the United
    1999 Decisions                                                                                                             States Court of Appeals
    for the Third Circuit
    3-4-1999
    Adams Lippincott v. Comm IRS
    Precedential or Non-Precedential:
    Docket 98-7200
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    http://digitalcommons.law.villanova.edu/thirdcircuit_1999/56
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    Filed March 4, 1999
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    No. 98-7200
    PRISCILLA M. LIPPINCOTT ADAMS,
    Appellant
    v.
    COMMISSIONER OF INTERNAL REVENUE
    ON APPEAL FROM THE
    UNITED STATES TAX COURT
    (Docket Nos. 96-15535 and 97-3437)
    Tax Court Judge: Honorable Maurice B. Foley
    Argued January 14, 1999
    Before: GREENBERG and RENDELL, Circuit Judges,
    and DEBEVOISE, District Judge*
    (Filed: March 4, 1999)
    Peter Goldberger, Esquire (Argued)
    James H. Feldman, Jr., Esquire
    50 Rittenhouse Place
    Ardmore, PA 19003
    Attorneys for Appellant
    _________________________________________________________________
    *Honorable Dickinson Debevoise, United States Senior District Court
    Judge for the District of New Jersey, sitting by designation.
    Loretta C. Argrett, Esquire
    Assistant Attorney General
    Michelle B. O'Connor, Esquire
    (Argued)
    Gilbert S. Rothenberg, Esquire
    Tax Division, Department of Justice
    P.O. Box 502
    Washington, DC 20044
    Attorneys for Appellee
    OPINION OF THE COURT
    RENDELL, Circuit Judge.
    Priscilla Adams claims that Religious Freedom
    Restoration Act ("RFRA") requires accommodation of her
    religious beliefs so that her tax payments do not fund the
    military. She also argues that RFRA and the free exercise
    clause mandate a finding that her religious beliefs
    constitute "reasonable cause" under 26 U.S.C. S 6651 for
    her failure to file returns or pay tax and an"unusual
    circumstance" which makes it "against equity and good
    conscience" for the Commissioner to impose the penalty for
    failure to estimate under 26 U.S.C. S 6654.
    I. Factual and Procedural History
    The facts are not in dispute. Adams is a devout Quaker;
    she currently works as a "Peace Field Secretary" for the
    Philadelphia Yearly Meeting of the Religious Society of
    Friends. She sincerely believes that participation in war is
    contrary to God's will, and hence, that the payment of taxes
    to fund the military is against the will of God. From 1985
    to 1989, Adams declared herself exempt from taxation, so
    no federal income tax would be withheld from her pay. In
    1989, the IRS sent a letter to her employer, the
    Philadelphia Yearly Meeting, directing it to withhold taxes
    from her salary as if she were married and claiming one
    withholding allowance.
    Adams has taken pains to ensure that she does not profit
    from her tax protests and to demonstrate that her beliefs
    2
    regarding refusal to pay taxes are sincere and are the result
    of being called or directed by God, in that she has been
    tested and challenged by "clearness committees" of
    members of her Meeting that have been convened to
    examine her beliefs on this topic. They have determined
    that the course of her conduct is the result of a"leading"
    from God. She asserts that she would voluntarily pay all of
    her federal income taxes if the money she paid were
    directed to a fund that supported only non-military
    spending, or if her payments could be directed to non-
    military expenditures, or that, with the consultation of a
    clearness committee, she would be willing to consider any
    other form of accommodation of her beliefs that could be
    offered by the government.
    The Commissioner assessed deficiencies and penalties
    against Adams for the years 1988, 1989, 1992, 1993, and
    1994. The Tax Court determined that Adams was not
    exempt from the payment of taxes under RFRA and was
    liable for the deficiencies and penalties assessed against
    her, relying on United States v. Lee, 
    455 U.S. 252
     (1982),
    and other case law preceding Employment Division v. Smith,
    
    494 U.S. 872
     (1990). Adams now appeals to this court. We
    have jurisdiction pursuant to 26 U.S.C. S 7482(a) (1994).
    Our review is plenary, as all of the issues raised are
    matters of law. See Geisinger Health Plan v. Commissioner,
    
    30 F.3d 494
    , 498 (3d Cir. 1994); Lazore v. Commissioner,
    
    11 F.3d 1180
    , 1182 (3d Cir. 1993).
    II. Discussion
    A. RFRA Claim
    The parties do not contest the constitutionality or the
    applicability of RFRA to the case at hand. They agree that
    RFRA applies to the federal government, as Boerne v.
    Flores, 
    117 S. Ct. 2157
     (1997), held only that RFRA was
    unconstitutional as applied to the states under section 5 of
    the Fourteenth Amendment. For the purposes of this
    appeal, we assume without deciding that RFRA is
    3
    constitutional as applied to the federal government. See
    Alamo v. Clay, 
    137 F.3d 1366
    , 1367 (D.C. Cir. 1998).1
    RFRA provides:
    (a) In general
    Government shall not substantially burden a person's
    exercise of religion even if the burden results from a
    rule of general applicability, except as provided in
    subsection (b) of this section.
    (b) Exception
    Government may substantially burden a person's
    exercise of religion only if it demonstrates that
    application of the burden to the person --
    (1) is in furtherance of a compelling governmental
    interest; and
    (2) is the least restrictive means of furthering that
    compelling governmental interest.
    _________________________________________________________________
    1. In general, courts that have addressed the question of
    constitutionality have found that RFRA is constitutional as applied to the
    federal government. See In re Young, 
    141 F.3d 854
     (8th Cir.), cert.
    denied, 
    119 S. Ct. 43
     (1998); see also EEOC v. Catholic Univ. of America,
    
    83 F.3d 455
    , 468-70 (D.C. Cir. 1996) (finding RFRA constitutional as
    applied to Title VII, but relying on Fifth Circuit's decision in Boerne);
    but
    see Boerne, 
    117 S. Ct. at 2171
     (Stevens, concurring, questioning
    Establishment Clause implications of RFRA); 
    141 F.3d at 862-68
     (Bogue,
    dissenting); United States v. Grant, 
    117 F.3d 788
    , 792 n.6 (5th Cir. 1997)
    (questioning RFRA's viability in the federal context); In re Gates, 
    212 B.R. 220
     (Bankr. W.D.N.Y. 1997) (finding that Boerne overruled RFRA
    altogether). Some commentators have noted that RFRA may be
    unconstitutional as applied to federal law. See Marci Hamilton, The
    Religious Freedom Restoration Act is Unconstitutional, Period, 
    1 U. Pa. J. Const. L. 1
     (1998); Aurora R. Bearse, Note, RFRA: Is it Necessary? Is it
    Proper?, 
    50 Rutgers L. Rev. 1045
     (1998); Edward J.W. Blatnik, Note, No
    RFRAF Allowed: The Status of the Religious Freedom Restoration Act's
    Federal Application in the Wake of City of Boerne v. Flores, 
    98 Colum. L. Rev. 1410
     (1998); but see Thomas C. Berg, The Constitutional Future of
    Religious Freedom Legislation, 20 U. Ark. Little Rock L.J. 715 (1998)
    (arguing that RFRA is constitutional as applied to the federal
    government).
    4
    Adams argues that under RFRA, she is exempt from
    federal income tax for the years in which she has been
    assessed a deficiency, because requiring her to pay these
    taxes substantially burdens her religious beliefs. She
    concedes that the government has a compelling interest in
    the collection of taxes, but contends that the IRS failed to
    meet its burden under RFRA of proving that it could not
    accommodate her, that is, that there is no less restrictive
    means of furthering the government's interest. She argues
    that this failure of proof requires this court to reverse the
    Tax Court and find that Adams owes no taxes for the years
    in question, and that she is not required to pay income
    taxes so long as the Commissioner does not act to
    accommodate her objections. Adams contends that she is
    not asking to be exempted from the payment of taxes
    altogether, but that she wants her beliefs to be
    "accommodated," because RFRA requires that the IRS
    accommodate her objection, unless the refusal to do so is
    the "least restrictive means" for achieving the government's
    compelling interest in tax collection. The Commissioner
    accepts Adams's acknowledgment that the government has
    a compelling interest in the collection of taxes, and urges
    us to find that the current system -- uniform and
    mandatory in nature -- is the least restrictive means of
    furthering that interest.
    There is little doubt that RFRA was enacted as a direct
    response to Employment Division v. Smith, and to restore
    the tests that were routinely employed before the Supreme
    Court's ruling that neutral, generally applicable laws may
    impinge on religious practices, even in the absence of a
    compelling state interest. See 
    494 U.S. at 882-84
    ; Boerne,
    
    117 S. Ct. at 2161
    . RFRA requires courts to employ the test
    set forth above in the statutory language. First, the
    claimant must demonstrate a "substantial burden" on her
    exercise of her religious beliefs. If she does so, the burden
    shifts to the government to demonstrate that the regulation
    or practice at issue furthers a "compelling interest," and
    that it furthers that interest by the "least restrictive
    means." See S 2000bb-1; Small v. Lehman, 
    98 F.3d 762
    ,
    767 (3d Cir. 1996), overruled by 
    117 S. Ct. 2157
     (1997).2
    _________________________________________________________________
    2. Small was overruled by Boerne. However, we use this case and other
    cases applying RFRA to state institutions and laws as a guide to how we
    should interpret the statute, although we realize we are not bound by
    their dictates.
    5
    In enacting RFRA, Congress specifically announced its
    intent to "restore" the "compelling interest" test set forth in
    Sherbert v. Verner and Wisconsin v. Yoder:
    The purposes of this chapter are --
    (1) to restore the compelling interest test as set forth in
    Sherbert v. Verner, 
    374 U.S. 398
     (1963) and Wisconsin
    v. Yoder, 
    406 U.S. 205
     (1972) and to guarantee its
    application in all cases where free exercise of religion is
    substantially burdened; and
    (2) to provide a claim or defense to persons whose
    religious exercise is substantially burdened by the
    government.
    S 2000bb(b).
    However, Congress's intent with regard to the precise
    contours of the elements of the RFRA test is a somewhat
    different matter, as neither the statutory provisions, the
    legislative history, nor the floor debates indicate exactly
    how the elements of the test are defined, or are defined in
    relation to the pre-Smith case law. See S 2000bb(a);
    S 2000bb-2; S. Rep. No. 103-111 (1993), at 5-9, 15-16,
    reprinted in 1993 U.S.C.C.A.N. 1893, 1894-98, 1904-05;
    see also 139 Cong. Rec. S1415-01, S14515-16 (daily ed.
    Oct. 27, 1993) (statements of Senator Chaffee); 139 Cong.
    Rec. S14461-01, S14462, S14468, S14469 (daily ed. Oct.
    26, 1993) (statements of Senators Feingold, Lieberman, and
    Bradley); 139 Cong. Rec. S14350-01, S14350, S14353
    (daily ed. Oct. 26, 1993) (statements of Senators Kennedy
    and Hatch); 139 Cong. Rec. H2356-03, H2356-59, H2360-
    61 (daily ed. May 11, 1993) (remarks of Representatives
    Brooks Edwards, Fish, Hughes, and Schumer); The
    Religious Freedom Restoration Act: Hearing on S. 2969
    Before the Comm. on the Judiciary of the United States
    Senate, 102nd Cong. 2, 129-35 (Sept. 18, 1992). While
    prior cases touched on one or more of the aspects of the
    RFRA test, these elements -- substantial burden,
    compelling interest, least restrictive means -- did not
    constitute a comprehensive standard, let alone a uniform or
    established test, prior to Smith.3 The instant case presents
    _________________________________________________________________
    3. The Supreme Court stated in Boerne,"the Act imposes in every case
    a least restrictive means requirement -- a requirement that was not used
    6
    the issue, as to whether, and if so, how, we should
    construe RFRA in light of prior case law. The legislative
    history of both the House and the Senate versions of RFRA
    contain explicit indications that prior case law is central to
    the understanding of the compelling interest test:
    The committee wishes to stress that the act does not
    express approval or disapproval of the result reached
    in any particular court decision involving the free
    exercise of religion, including those cited in the act
    itself. This bill is not a codification of the result
    reached in any prior free exercise decision but rather
    the restoration of the legal standard that was applied
    in those decisions. Therefore, the compelling interest
    test generally should not be construed more stringently
    or more leniently than it was prior to Smith.
    S. Rep. No. 103-111 at 9; H.R. Rep. No. 103-88 at 21
    (1993).4
    _________________________________________________________________
    in the pre-Smith jurisprudence RFRA purported to codify." See 
    117 S. Ct. at 2171
    . We note that this "element" has in fact appeared sporadically in
    those terms or as a "narrowly tailored" requirement. See Smith, 
    494 U.S. at 894-95
     (O'Connor, concurring) (noting that in free exercise cases, "we
    have respected both the First Amendment's express textual mandate that
    the governmental interest in regulation of conduct by requiring the
    government to justify any substantial burden on religiously motivated
    conduct by a compelling state interest and by means narrowly tailored
    to achieve that interest," citing Hernandez v. Commissioner, 
    490 U.S. 680
    , 699 (1989); Lee, 
    455 U.S. at 257-58
    , cited in S. Rep. 103-111 at 7;
    see also Hobbie v. Unemployment Appeals Comm'n., 
    480 U.S. 136
    , 140-
    42 (1987) (strict scrutiny applies to free exercise unemployment
    compensation challenge); Thomas v. Review Bd., 
    450 U.S. 707
    , 718
    (1981) ("The state may justify an inroad on religious liberty by showing
    that it is the least restrictive means of achieving some compelling state
    interest.")
    4. The floor debates contain an extended "colloquy" between Senators
    Grassley and Hatch that occurred during the Judiciary Committee
    markup of the bill, which states in pertinent part:
    Grassley: Does this bill change the way courts assess a "compelling state
    interest"? Will it still be up to the judge -- who will look at all the
    facts
    in the case -- to say whether there is a compelling interest? In other
    words, this bill does not purport to legislate a definition of compelling
    interest, does it?
    7
    The legislative history accompanying the Senate bill also
    includes the following directive: "The committee expects
    that the courts will look to free exercise cases decided prior
    to Smith for guidance in determining whether the exercise
    of religion has been substantially burdened and the least
    restrictive means have been employed in furthering a
    compelling governmental interest." S. Rep. 103-111 at 8-9.5
    Cases decided before Smith involving application of the
    standards to the tax system, or to situations analogous to
    the tax system are, therefore, instructive. In United States
    v. Lee, the Supreme Court rejected a free exercise challenge
    to the imposition of social security taxes based on the fact
    that mandatory participation was necessary to the
    functioning of the social security program, and that a
    voluntary system would be impossible to administer. See
    
    455 U.S. at 257-59
    . In so finding, the Court noted:
    Religious beliefs can be accommodated, see, e.g.,
    Thomas, 
    supra;
     Sherbert, 
    supra,
     but there is a point at
    which accommodation would "radically restrict the
    operating latitude of the legislature." . . . Unlike the
    situation presented in Wisconsin v. Yoder, 
    supra,
     it
    would be difficult to accommodate the comprehensive
    _________________________________________________________________
    Hatch: RFRA reestablishes a very familiar and traditional standard of
    review that the courts have been applying since the 1963 decision
    Sherbert v. Verner. That is why we do not attempt to define the standard
    in the bill. This bill does not dictate the proper result in a particular
    free
    exercise case nor does it identify specific governmental interests that
    are
    compelling. The courts will continue to determine whether burdens on
    religious exercise are justified, based upon a consideration and weighing
    of all relevant facts and circumstances. Historically, the courts have had
    little difficulty identifying important governmental interests. For
    example,
    the courts have found eradication of racial discrimination to be a
    compelling governmental interest.
    139 Cong. Rec. S14461-01, S14470 (daily ed. Oct. 27, 1993).
    5. In enacting RFRA, Congress seized upon language from Supreme
    Court opinions to create a statutory cause of action. In determining the
    bounds of Congressional intent in creating that statutory right we look
    to Congress's statements about pre-Smith case law as instructive for our
    purposes, namely, to "say what the law is." Marbury v. Madison, 
    1 Cranch 137
    , 177 (1803).
    8
    social security system with myriad exceptions flowing
    from a wide variety of religious beliefs. The obligation
    to pay the social security tax initially is not
    fundamentally different from the obligation to pay
    income taxes; the difference -- in theory at least-- is
    that the social security tax revenues are segregated for
    use only in furtherance of the statutory program. There
    is no principled way, for purposes of this case, to
    distinguish between general taxes and those imposed
    under the Social Security Act. If, for example, a
    religious adherent believes war is a sin, and if a certain
    percentage of the federal budget can be identified as
    devoted to war-related activities, such individuals
    would have a similarly valid claim to be exempt from
    paying that percentage of the income tax. The tax
    system could not function if denominations were
    allowed to challenge the tax system because tax
    payments were spent in a manner that violates their
    religious belief. . . . Because the broad public interest
    in maintaining sound tax system is of such a high
    order, religious belief in conflict with the payment of
    taxes affords no basis for resisting the tax.
    
    455 U.S. at 259-60
    .
    In Hernandez, members of the Church of Scientology raised
    several challenges to the disallowance of claimed
    exemptions for the monies they had paid for spiritual
    training classes and sessions, including a free exercise
    challenge. In upholding the disallowance of exemptions in
    the face of their free exercise challenge, the Hernandez
    court relied on Lee:
    [O]ur decision in Lee establishes that even a
    substantial burden would be justified by the "broad
    public interest in maintaining a sound tax system,"
    free of "myriad exceptions flowing from a wide variety
    of religious beliefs." 
    455 U.S. at 260
    . . . . That these
    cases involve federal income taxes, not the Social
    Security system, is of no consequence. 
    Ibid.
     The fact
    that Congress has already crafted some deductions and
    exemptions in the Code also is of no consequence, for
    the guiding principle is that a tax "must be uniformly
    9
    applicable to all, except as Congress provides explicitly
    otherwise." 
    Id. at 261
    .
    
    490 U.S. at 699
     (emphasis added in original).
    Lee and Hernandez are both part of a line of cases that
    have refused to recognize free exercise challenges to the
    payment of taxes or penalties imposed due to a refusal to
    pay taxes as a protest against the military activities of the
    United States. See, e.g., Lull v. Commissioner, 
    602 F.2d 1166
     (4th Cir. 1979) (per curiam); Graves v. Commissioner,
    
    579 F.2d 392
     (6th Cir. 1978); First v. Commissioner, 
    547 F.2d 45
     (7th Cir. 1976) (per curiam); Autenreith v. Cullen,
    
    418 F.2d 586
     (9th Cir. 1969); see also Bethel Baptist
    Church v. United States, 
    822 F.2d 1334
     (3d Cir. 1987)
    (social security taxes); Kahn v. United States , 
    753 F.2d 1208
    , 1215-16 (3d Cir. 1985); McLaughlin v. Commissioner,
    
    832 F.2d 986
     (7th Cir. 1987); Nelson v. United States, 
    796 F.2d 164
     (6th Cir. 1986); McKee v. United States, 
    781 F.2d 1043
     (4th Cir. 1985); Collett v. United States , 
    781 F.2d 53
    (6th Cir. 1985) (per curiam); Jenney v. United States, 
    755 F.2d 1384
     (9th Cir. 1985); Wall v. United States, 
    756 F.2d 52
     (8th Cir. 1985); Welch v. United States, 
    750 F.2d 1101
    (1st Cir. 1985); Ballinger v. Commissioner, 
    728 F.2d 1287
    (10th Cir. 1984); cf. United States v. Malinowski, 
    472 F.2d 850
     (3d Cir. 1973) (First Amendment an insufficient
    defense to tax evasion).6
    In the case before us, the Tax Court stated that the
    "uniform, mandatory participation in the Federal income
    tax system, irrespective of religious belief, is a compelling
    governmental interest. . . . As a result, requiring petitioner's
    participation in the Federal income tax system is the only,
    and thus the least restrictive, means of furthering the
    Government's interest." See Adams v. Commissioner, 
    110 T.C. 137
    , 139 (1998), citing Hernandez, 
    490 U.S. at
    699-
    700; Lee, 
    455 U.S. at 260
    . Adams argues that the tax court
    misconstrued the compelling interest, and did so in so
    _________________________________________________________________
    6. In discussing instances in which the "compelling interest" test has
    been used to uphold governmental practices, Congress cited cases
    disallowing the availability of tax exemptions on the basis of religious
    practice and belief, namely, Hernandez, Lee, and Bob Jones University v.
    United States, 
    461 U.S. 574
     (1983). See S. Rep. No. 103-111 at 5.
    10
    broad a manner, that the court did not address the "least
    restrictive means" prong. She contends that the government
    did not meet its burden in this regard. We disagree.
    Mindful of the comments of both the House and Senate,
    while we are not bound by the results in Lee and
    Hernandez, we cannot help but be guided by their
    reasoning in determining whether the least restrictive
    means have been employed to further the government's
    compelling interest. Viewing the requirements of RFRA
    through the helpful lens of pre-Smith case law, we conclude
    that the nature of the compelling interest involved-- as
    characterized by the Supreme Court in Lee-- converts the
    least restrictive means inquiry into a rhetorical question
    that has been answered by the analysis in Lee. The least
    restrictive means of furthering a compelling interest in the
    collection of taxes -- a compelling interest that Adams has
    conceded -- is in fact, to implement that system in a
    uniform, mandatory way, with Congress determining in the
    first instance if exemptions are to built into the legislative
    scheme. The question of whether government could
    implement a less restrictive means of income tax collection
    surfaced in pre-Smith case law and was answered in the
    negative based on the practical need of the government for
    uniform administration of taxation, given particularly
    difficult problems with administration should exceptions on
    religious grounds be carved out by the courts. See Lee, 
    455 U.S. at 259-60
    . We acknowledge the sincerity of Adams's
    beliefs, but as the Supreme Court noted in Lee, we can
    easily imagine a plethora of other sects that would also
    have an equally legitimate concern with the usage of tax
    dollars to fund activities antithetical to their religion. See
    
    455 U.S. at 259
    . We also note that the same concerns with
    religious pluralism that prompted the passage of RFRA
    have also prompted past courts' reluctance to become
    involved in determining whether a claimant's beliefs are
    "sincerely held," due to the multiplicity of beliefs in this
    country; these concerns also fortify our resistance to court-
    created exemptions to the income tax system. See Lee, 
    455 U.S. at 259
    ; Lull, 
    602 F.2d at 1168-69
    ; cf. Kahn, 
    753 F.2d at 1214
    .
    Our approach to this particular form of tax challenge
    under RFRA is consistent with that of the Ninth Circuit
    11
    Court of Appeals, the only other circuit court to have
    wrestled with this issue in a similar factual context. In
    Goehring v. Brophy, a group of college students challenged
    the collection of student fees under RFRA, as those fees
    subsidized a health insurance plan that covered abortion
    services. 
    94 F.3d 1294
    , 1297 (9th Cir. 1996), cert. denied,
    
    117 S. Ct. 1335
     (1997), overruled by 
    117 S. Ct. 2157
    . In
    analyzing the "least restrictive means" prong of the RFRA
    test, the court analogized the challenge to university
    funding to that of free exercise challenges to the
    government's use of tax dollars. See id. at 1300. The court
    then looked to Lee as its guide, and found that the fiscal
    vitality of the university fee system would be undermined if
    the plaintiffs were exempted from paying their fees on free
    exercise grounds, as mandatory participation was
    necessary to ensure the survival of the student health
    insurance program. See id. The court also relied on the
    reasoning in Autenreith, a pre-Lee war tax protester case,
    as persuasive authority for its decision that mandatory
    student participation in a health insurance scheme was the
    least restrictive means of accomplishing the University's
    goals. 
    94 F.3d at 1301-02
    . We also find this reasoning
    instructive:
    The Income Tax Act does not ``aid one religion, aid all
    religions, or prefer one religion over another.' Not does
    it punish anyone ``for entertaining or professing
    religious beliefs or disbeliefs' . . . . It taxes plaintiffs like
    all others, because they are citizens or residents who
    have taxable income. On matters religious, it is
    neutral. If every citizen could refuse to pay all or part
    of his taxes because he disapproved of the
    government's use of the money, on religious grounds,
    the ability of the government to function could be
    impaired or even destroyed. . . . There are few, if any
    governmental activities to which some person or group
    might not object on religious grounds.
    
    418 F.2d at 588-89
    , cited in 
    94 F.3d at 1301-02
    .
    In another case decided by the Court of Appeals for the
    Ninth Circuit, Droz v. Commissioner, the appellant had
    challenged the assessment of unpaid self-employment
    social security taxes under the free exercise clause,
    12
    claiming that he had religious objections to the social
    security system. 
    48 F.3d 1120
    , 1121 (9th Cir. 1995). The
    court determined that the RFRA test should be applied to
    his claim, and then looked to Lee as the determinative case
    in analyzing his claim. See 
    id. at 1123
    . The Droz court
    denied his claim, noting that although compulsory
    participation in the social security system interfered with
    his free exercise rights, allowing him to opt out of the
    system on religious grounds would threaten the stability of
    the social security system by opening the door to myriad
    religious exceptions. See 
    id. at 1123-24
    ; cf. Sherbert, 
    374 U.S. at 408-09
     (noting that administrative problems
    rendering a scheme unworkable could be the basis for
    denial of religious accommodation).7
    Adams also argues that a later Congressional enactment
    of the exemption the Supreme Court refused to allow in Lee
    demonstrates that the Commissioner can and should
    accommodate religion through a series of exemptions or
    alternative approaches to tax collection or at least should
    prove why such religiously-based exemptions are not
    feasible. However, in making this argument, Adams
    _________________________________________________________________
    7. A number of RFRA cases arising in other factual contexts also
    demonstrate a sensitivity to the influence of pre-RFRA case law on the
    analysis of claims at hand. For example, in the context of RFRA
    challenges to prison policies and regulations, courts found that they
    still
    owe substantial deference to the judgment of prison administrators -- as
    was the practice under prior case law in determining the interests being
    furthered and means employed. See Lawson v. Singletary, 
    85 F.3d 502
    ,
    512 (11th Cir. 1996), overruled by 
    117 S. Ct. 2157
     (1997) (finding that
    the "least restrictive means" prong of RFRA was coextensive with the
    Supreme Court's decision in Procunier v. Martinez, 
    416 U.S. 396
     (1974),
    in which the "limitation of First Amendment freedoms must be no
    greater than is necessary or essential to the protection of the particular
    governmental interest involved."); Jolly v. Coughlin, 
    76 F.3d 468
    , 476 (2d
    Cir. 1996), overruled by 
    117 S. Ct. 2157
     (1997) (stating in its analysis
    of
    a challenge to TB regulations that its inquiry would occur "against the
    backdrop of prior decisions recognizing that courts are ill-equipped to
    substitute their judgments on matters of prison administration for those
    of prison authorities"); Hamilton v. Schiro, 
    74 F.3d 1545
    , 1554 n.9 (8th
    Cir. 1996), overruled by 
    117 S. Ct. 2157
     (1997) (court looks to Supreme
    Court precedent, RFRA's legislative history, and its own case law for
    guidance in interpreting RFRA).
    13
    misconstrues the nature of the tax system itself. We do not
    doubt that such legislative enactments can and do occur,
    but tax exemptions are a matter of legislative grace, see
    Lull, 
    602 F.2d at 1168
    , citing New Colonial Ice Co. v.
    Helvering, 
    292 U.S. 435
     (1934). It does not follow from
    Congressional action on such matters that the
    Commissioner or the courts are therefore encouraged to
    carve out exceptions to the statutory scheme.8
    Adams contends further that a finding against her is
    tantamount to exempting the IRS from RFRA altogether. We
    disagree. She has contested the current system of income
    tax collection on the basis of her religious beliefs, and the
    result this court reaches in evaluating her particular
    challenge is dictated by prior case law. This finding does
    not preclude the application of RFRA to the IRS in other
    factual contexts. In sum, we find that the Tax Court
    engaged in an appropriate analysis of Adams's RFRA claim
    based upon United States v. Lee, and that appellee was not
    required to produce evidence under the "least restrictive
    means" prong of RFRA in order to prevail.
    B. Liability for Penalties Assessed
    Under 26 U.S.C. S 6651(a), if a taxpayer fails to file, a
    penalty will be added unless the taxpayer can demonstrate
    1) lack of willful neglect, and 2) reasonable cause. Willful
    neglect may be read as "meaning a conscious, intentional
    failure or reckless indifference." See United States v. Boyle,
    
    469 U.S. 241
    , 245 (1985). Under the case law and
    appropriate regulations, in order to demonstrate
    "reasonable cause," a taxpayer must demonstrate that she
    exercised ordinary care and prudence but nevertheless was
    unable to file the return within the time allowed. 9 See id.;
    _________________________________________________________________
    8. The fact that Adams has suggested a number of alternative modes of
    tax collection for herself (religiously-based checkoffs on the tax forms,
    or
    a separate non-military based fund for tax monies) is beside the point.
    As Justice Blackmun noted, "A judge would be unimaginative indeed if
    he could not come up with something a little less``drastic' or a little
    less
    ``restrictive' in almost any situation, and thereby enable himself to vote
    to
    strike legislation down." Illinois State Bd. of Elections v. Socialist
    Workers
    Party, 
    440 U.S. 173
    , 188-89 (1979) (concurring).
    9. A "reasonable cause" exception on the basis of religious opposition to
    war is somewhat difficult to claim from the outset, due to the existence
    14
    Sanderling, Inc. v. Commissioner, 
    571 F.2d 174
    , 178-79 (3d
    Cir. 1978). Whether the elements that constitute
    "reasonable cause" are present in "a given case is a
    question of fact, but what elements must be present to
    constitute ``reasonable cause' is a question of law." Boyle,
    
    469 U.S. at
    249 n.8.
    Adams claims that Scott v. Commanding Officer, 
    431 F.2d 1132
    , 1136 (3d Cir. 1970), a conscientious objector case,
    indicates that she was compelled by her beliefs not to file,
    and that as a result, she has demonstrated reasonable
    cause under the statute, because the beliefs inducing her
    not to file her returns were so powerful that her actions
    were beyond her control. In so claiming, she cites to
    language in Scott stating that: "beliefs of conscience are
    always beyond one's control; one cannot sincerely turn his
    conscience on and off at will." 
    431 F.2d at 1136
    . Similarly,
    Adams claims that the waiver provision of section 6654(e)(3)
    for "unusual circumstances" applies to her case, claiming
    that her adherence to religious beliefs and subsequent
    refusal to pay taxes -- the "reasonable cause" argument set
    forth above -- is a sufficiently unusual circumstance to
    nullify the penalty, despite the fact that it is somewhat rare
    for a court to recognize a "reasonable cause" exception as
    an "unusual circumstance" that precludes a section 6654(a)
    penalty. See In re Carlson, 
    126 F.3d 915
    , 921 (7th Cir.
    1997), cert. denied, 
    118 S. Ct. 1388
     (1998) (listing cases);
    Webster v. United States, 
    375 F.2d 814
     (Ct. Cl. 1967)
    (finding a reasonable cause exception due to changes in tax
    code and taxpayer's lack of information as rural landowner).10
    _________________________________________________________________
    of cases upholding the assessment of a "frivolous return" penalty under
    26 U.S.C. S 6702 against persons claiming "war tax" deductions or
    exemptions. See Nelson, 
    796 F.2d at 165-67
     (addressing constitutionality
    of section 6702); Welch, 
    750 F.2d at 1108-09
     (rejecting free exercise
    challenge to section 6702); Tax Equity and Fiscal Responsibility Act, S.
    Rep. 97-494 (1982), 1982 U.S.C.C.A.N. 781, 1023-24 (discussing protest
    returns, including "war tax" protest returns, as necessitating the
    enactment of section 6702).
    10. Adams also argues that the statutory scheme that permits penalties
    if the taxpayer demonstrates "reasonable cause" or "unusual
    circumstances" has constitutional implications. She contends, relying on
    15
    We find Adams's arguments appealing, but ultimately
    unconvincing. She has misconstrued Scott; the focus of the
    court's analysis in Scott was on the sincerity of the beliefs
    of the individual in question -- the sincerity of Adams's
    beliefs is not in question. However, despite the sincerity of
    those beliefs, her claim has returned this court to a well-
    established line of cases involving challenges to the
    collection of taxes on religious grounds. Although Adams's
    beliefs may be unusual as compared to the general
    population, the very body of case law relating to war tax
    protesters indicates that in the realm of tax litigation, she
    is one of many. As a result, her "compulsion" argument
    affords her no excuse, as the prior plaintiffs were also
    compelled by religious belief, but, like Adams, made the
    difficult decision to act in a manner contrary to law.
    Moreover, Adams is asking this court to draw a distinction
    between holding sincerely felt political and religious beliefs
    and facing the consequences of those beliefs; we have been
    and continue to be reluctant to make such a distinction.
    We have noted, in slightly different contexts, that plaintiffs
    engaging in civil disobedience through tax protests must
    _________________________________________________________________
    language in Smith, that where a governmental entity has in place a
    system of "individual exemptions," the failure to extend those exemptions
    to a case of religious hardship constitutes discrimination on the basis of
    religious belief. 
    494 U.S. at 884
    . The "reasonable cause" exception,
    according to Adams, is one such "individual exemption," and therefore,
    the assessment of a penalty against her when she has demonstrated
    "reasonable cause" is unconstitutional. The concept of "individual
    exemptions" in Smith is not the same as "reasonable cause" in the I.R.C.,
    and we have little difficulty finding that the imposition of penalties on
    Adams does not constitute discrimination on the basis of her religion.
    The exemptions at issue here are uniform and facially neutral; the
    exemption at issue in Sherbert allowed for special protection for
    employees opposed to working on Sundays, and allowed the Commission
    making the determination to take religious and personal beliefs into
    account; here, the exemptions at issue are uniform and facially neutral.
    See Sherbert, 
    374 U.S. at 401-03, 406-09
    . In terms of both statutory
    interpretation and constitutional interpretation, Adams's definitions of
    "reasonable cause" and "unusual circumstances" are outside of the
    bounds of what these terms mean. See McMahan v. Commissioner, 
    114 F.3d 366
    , 368-69 (2d Cir. 1997) (setting out parameters of reasonable
    cause exception).
    16
    pay the penalties incurred as a result of engaging in such
    disobedience. See Kahn, 
    753 F.2d at 1215-16
    ; cf.
    Malinowski, 
    472 F.2d at 855-58
    .
    We will affirm the decision of the Tax Court.
    A True Copy:
    Teste:
    Clerk of the United States Court of Appeals
    for the Third Circuit
    17
    

Document Info

Docket Number: 98-7200

Filed Date: 3/4/1999

Precedential Status: Precedential

Modified Date: 10/13/2015

Authorities (44)

Illinois State Board of Elections v. Socialist Workers Party , 99 S. Ct. 983 ( 1979 )

United States v. Lee , 102 S. Ct. 1051 ( 1982 )

In Re Gates Community Chapel of Rochester, Inc. , 1997 Bankr. LEXIS 1349 ( 1997 )

Hernandez v. Commissioner , 109 S. Ct. 2136 ( 1989 )

City of Boerne v. Flores , 117 S. Ct. 2157 ( 1997 )

Adams v. Commissioner , 110 T.C. 137 ( 1998 )

Geisinger Health Plan v. Commissioner of Internal Revenue ... , 134 A.L.R. Fed. 689 ( 1994 )

United States v. Walter v. Grant, Jr. , 117 F.3d 788 ( 1997 )

Paul Jolly v. Thomas Coughlin, Robert Greifinger, John P. ... , 76 F.3d 468 ( 1996 )

Wallace T. Collett and Carrie H. Collett v. United States , 781 F.2d 53 ( 1985 )

in-re-bruce-young-in-re-nancy-young-julia-a-christians-v-crystal , 141 F.3d 854 ( 1998 )

Marbury v. Madison , 2 L. Ed. 60 ( 1803 )

Employment Div., Dept. of Human Resources of Ore. v. Smith , 110 S. Ct. 1595 ( 1990 )

Sherbert v. Verner , 83 S. Ct. 1790 ( 1963 )

New Colonial Ice Co. v. Helvering , 54 S. Ct. 788 ( 1934 )

Alamo, Tony v. Clay, Jasper R. , 137 F.3d 1366 ( 1998 )

Jack M. Ballinger and Brenda M. Ballinger v. Commissioner ... , 728 F.2d 1287 ( 1984 )

Dr. Marjorie E. Nelson v. United States of America, ... , 796 F.2d 164 ( 1986 )

David Bruce McMahan v. Commissioner of Internal Revenue , 114 F.3d 366 ( 1997 )

mark-juan-hamilton-united-states-of-america-intervenor-v-dora-schriro , 74 F.3d 1545 ( 1996 )

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