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THE NATIONALIST MOVEMENT, A MISSISSIPPI NON-PROFIT CORPORATION, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentNationalist Movement v. CommissionerDocket No. 10540-91XApril 11, 1994, Filed
United States Tax Court *24 An order will be issued granting respondent's motion to strike material from petitioner's rebuttal brief and denying petitioner's motion to supplement the administrative record.
Decision will be entered for respondent.
P, an organization seeking tax-exempt status under
sec. 501(c)(3), I.R.C. , advocates social, economic, and political change in the United States. Among its activities are the publication and distribution of a monthly newsletter, the production of a cable television program, the conducting of a telephone counseling service, and participation in public events such as speeches, rallies, and parades. P also engages in litigation activities. R rejected P's application for exemption on the grounds that P does not operate exclusively for charitable or educational purposes and that P operates in furtherance of a substantial private purpose.1.
Held : P does not serve a private interest rather than a public interest.Sec. 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs. 2.
Held, further , P has not established that its telephone counseling service is in furtherance of a charitable or educational purpose.3.
Held, further ,Rev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 ,*25 is not unconstitutionally vague or overbroad on its face, nor otherwise unconstitutional as applied to P.4.
Held, further , P's monthly newsletter is not in furtherance of an educational purpose.5.
Held, further , P has not established a violation of its due process and equal protection rights.For petitioner: Richard Barrett.For respondent:Vivian A. Moore andJoan R. Domike .HAMBLENHAMBLENOPINION
HAMBLEN,
Chief Judge : Respondent determined that petitioner, The Nationalist Movement (sometimes abbreviated as TNM), does not qualify for exemption from Federal income taxation undersection 501(c)(3) .section 7428(a) . The parties agree that petitioner has exhausted the administrative remedies available within the Internal Revenue Service (IRS) and has timely filed its petition in this Court. Seesec. 7428(b) .*26 A preliminary issue for decision is: (1) Whether an appendix to petitioner's brief is a proper supplement to the administrative record under
Rule 217(a) . The statutory issues, which relate to whether petitioner operates exclusively for exempt purposes within the meaning ofsection 501(c)(3) , are: (2) Whether, without regard to specific activities, petitioner more than incidentally serves a private interest rather than a public interest; and (3) whether, in view of petitioner's specific activities, including publication and distribution of a monthly newsletter, petitioner operates exclusively for charitable and/or educational purposes. The constitutional issues are: (4) WhetherRev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 , is unconstitutionally vague or overbroad on its face, or otherwise unconstitutional as applied, in contravention of the1st ,5th , and14th Amendments ; and (5) whether respondent has violated due process and equal protection rights by treating petitioner differently than others similarly situated.Background This case was submitted for decision under
Rule 217 on the basis of a stipulated administrative record, which is incorporated*27 herein by reference. At the time of filing the petition, the principal office of petitioner was in Jackson, Mississippi.In applying for a State charter as a nonprofit corporation, which Mississippi approved on June 8, 1987, petitioner's incorporators stated the purposes of the organization as follows:
To promote democracy and the rights of the American people; to uplift those who work, the poor, the sick, the aged and the distressed; to strengthen the Constitution, nationality, independence and freedom of the nation; to advance social justice; to charter and organize chapters and kindred organizations, all as a 501(c)(3) tax-exempt organization. * * *
According to its constitution, adopted on June 21, 1987, petitioner was to be "a non-profit charitable, educational and fraternal organization dedicated to advancing American freedom, American democracy and American nationalism." The overseeing board was to consist initially of a chairman (also known as the speaker and chief executive officer), a secretary, and a treasurer. The chairman was to have sole management*28 authority, including the appointment and expulsion of officers (i.e., board members), subject to override by a combined three-fourths vote of the board and a three-fourths vote of the "working" membership. Of the five classes of membership described in the constitution, only the working membership was entitled to vote or to hold office.
Under petitioner's bylaws, also adopted on June 21, 1987, all applicants for working, regular, and student memberships were to "submit an application, written and signed, adhering to the ideals of the organization and agreeing to abide by the Constitution, By-laws, rules and regulations of the organization." Prospective working members were required to submit, in addition, a recommendation from a current working member or officer. Applicants were to become members upon approval by the chairman.
Through its spokespeople, supporters, and other means of disseminating information, petitioner advocates social, political, and economic change in the United States. More specifically, petitioner espouses a "pro-majority" philosophy, which generally favors those Americans who are white, Christian, English-speaking, and of northern European descent. In *29 a pamphlet entitled "Why Join The Nationalist Movement?", the enclosed membership application states:
I apply for membership in The Nationalist Movement vowing freedom as the highest virtue, America as the superlative nation, Christianity as the consummate religion, social justice as the noblest pursuit, English as the premier language, the White race as the supreme civilizer, work as the foremost standard and communism as the paramount foe.
Petitioner often encourages its supporters to collect food and clothing for, and otherwise assist, the poor, sick, and elderly. Petitioner includes Christian observances in its public activities and sometimes conducts ceremonies that center around the raising of an American flag or the laying of memorial wreaths.
Most of petitioner's members are young, with an average age in the low twenties, and some join at age 12 or 13 or even younger. In late 1989, petitioner's fastest growing segment of supporters was high school students. Petitioner's literature refers to students as the "wellspring" of nationalist activity and to youth as the "mainstay" and "seedbed" of petitioner.
Richard Barrett (Barrett), who handles day-to-day operations, has been petitioner's chairman since its incorporation in 1987. He *31 is petitioner's chief spokesperson and also serves as its attorney and treasurer. According to Barrett, the most authoritative work concerning petitioner's program is a book entitled "The Commission", which he authored in 1982. Nearly half of the 394-page text is an autobiographical account from early childhood forward, including a military tour of duty in Vietnam and subsequent political involvement. As recounted in the book, Barrett ran unsuccessfully in Mississippi for the State legislature in 1970 and for the governorship in 1980. The latter half of the book presents Barrett's view of the nationalist position in a wide range of subject areas. These chapters are entitled "Life", "Freedom", "The Citizen", "Constitution", "The American", "Labor", "The People", "Race", "Population", "The Nation", "The World", "Culture", "Education", "The Woman", "Morality", "Military", "The Law", and "Religion".
At its first national convention, in July 1988, petitioner adopted a comprehensive platform of 50 subjects. The topics covered included the environment, religion, crime, jobs, social justice, abortion, war, the right to keep and bear arms, the flag, drugs, the news media, morality, and*32 commerce. Among the specific provisions were the following:
1. Government (a) America must be one, indivisible, sovereign and independent nation ruled as a democracy by the majority of the American people.
* * *
2. Labor (a) Work must be the common denominator of American nationality. Those who are productive and hard-working must be rewarded with better pay, decent working conditions and an advanced standard of living.
(b) Those who loaf shall no longer be supported by those who work.
* * *
6. Justice (a) There shall be justice for all, favors for none. All institutions and endeavors shall remove all vestiges of privilege and special favors for the few, the minorities and the rich.
* * *
27. Special Interests (a) All laws which prohibit the freedom of the American people to buy and sell, hire and fire, live and work, vote and run for office, shall be repealed.
(b) Special favors for minorities (such as quotas and affirmative action) shall give way to democratic rule by the majority, until the last vestiges of special-interest tyranny is [sic] removed from every corner of the nation.
(c) Racial busing to promote integration shall*33 be abolished.
* * *
29. Communism (a) Communism must be defeated and every trace of it rooted out within our borders and throughout the world.
* * *
30. Citizenship (a) Citizenship shall be restricted to real Americans only who pass rigid tests for parentage, nationality, health, morality, literacy and adherence to American standards.
(b) No non-American, anti-American or un-American shall vote or hold office. Gerrymandered districts created to give special privileges to minorities shall be annulled in favor of districts which assure democratic rule by the majority.
Barrett began a 1988 fund-raising letter for petitioner with: "Will you sign my petition to keep gangs of minorities from replacing government by the people?" He went on to describe some incidents of perceived injustice carried out by minorities against whites, including the beating of a high school student, demands for the ouster of white school officials and other white workers, and the tearing down of an American flag. Concerning proposed action, the letter stated:
Here's my plan.
We'll do for the majority in the 1980's what others did for the minorities in the 1960's.
Parading, *34 speaking, rallying, petitioning.
Only we won't riot, loot or burn. We'll wave flags, win lawsuits, sing songs and gain power.
I am an American, freedom-loving citizen. As such, I protest the never-ending, escalating demands of minorities; I deplore the violence used by minorities when the American majority gets in their way * * * and I denounce the un-democratic public officials who cater to the minorities over the American majority.
I call upon you to defeat each and every demand by the minorities, to regain all the rights we have already lost, to remove rowdies from schools by abolishing compulsory attendance, to restore discipline and learning to classrooms and to assure democracy, decency and opportunity for American youth.
A few times a year, sometimes in conjunction with its annual conferences, petitioner conducts "Warrior Weekends" involving physical and weapons training for members. Petitioner does not, however, advocate the use of threats, violence, or illegal acts. Petitioner uses "Strikers", who are unarmed young men in camouflage attire, to protect its other supporters during public events. *35 So-called skinheads, who often participate in the weekend events, have long been welcomed as members.
Petitioner publishes a 4-page monthly newsletter entitled "All *36 the Way", with the subtitle "Fighting Journal of The Nationalist Movement", and distributes it largely by mail. Each issue includes a simple order form that, among other things, permits the reader to purchase an annual membership for $ 20 (regular) or $ 10 (youth). Sometime before mid-1990, the order form began to include blanks for "Age", "Work", and "Marital", followed by the statement, "Applicant accepts TNM goals and rules". Most of petitioner's memberships, at least in its first 2 years, originated in the order form of the newsletter.
Although membership dues include a subscription to the newsletter at no additional charge, the order form in the newsletter indicates that subscriptions are also available to the nonmember public for $ 12 annually. Those qualifying for free copies, as stated in each issue, are "disabled veterans or unemployed, students or elderly without income". The November 1988 issue encouraged readers to "Order and distribute" extra copies, and the March 1989 issue stated that a planned expansion of the newsletter would be "more readable when handed out on streets."
Barrett has been the editor of the newsletter since October 1988 and thus generally controls*37 the topics covered, although he does receive input from members and other readers. Among its varied contents, which do not include advertising, the newsletter reports on past and upcoming rallies, speeches, litigation, and other events, answers questions about petitioner, and provides editorial commentary. As an example of the latter, an early issue noted, without elaboration, petitioner's "common sense" standards for Justices of the Supreme Court, including "No odd or foreign name", "No beard", "Christian and Protestant", and "Anti-ERA [Equal Rights Amendment] and anti-busing." Since 1990, each issue has contained a disclaimer that "Views [are] not necessarily those of TNM."
Recurring adversaries in the newsletter are "black-power" activists and groups, the latter sometimes characterized as gangs, mobs, or invaders. *38 referred to is petitioner's protest, led by Barrett, of the 1988 Democratic National Convention in Atlanta, Georgia.
A very common editorial topic is the Federal holiday commemorating the birth of Martin Luther King, Jr. (King). In November 1987, the newsletter urged readers to attend a parade in Greensboro, North Carolina, supporting abolishment of the holiday; this event would "kick off month-long Anti-King activities across the country." The next month's issue included purported background information*39 on King relating to his "scandalous" personal life, his "communist associations", and his alleged propensity for violence.
As paraphrased in the November 1988 newsletter, Barrett responded as follows to a question during a talk show broadcast about what the future holds:
instead of a holiday for Martin Luther King, there would be a day honoring Mike Moran, the Newark, New Jersey policeman shot in the back by King-instigated looters and rioters in 1968. "No King Over Us," he said.
The newsletter often makes unflattering references to black people without specific regard to King or the events of January 1987. For example, the March 1988 issue contained an apparent first-person account of a white prison inmate, who lamented the high incidence of homosexuality and AIDS among nonwhite inmates, especially "Negroes". As reported in June 1988, a 17-year-old*40 white student introduced at a news conference by Barrett was allegedly beaten by "Negro gangs". In the October 1988 issue of the newsletter, the following appears:
DETROIT -- Chrysler bragged that it employed more non-whites than Ford or GM. Within three years of increasing shoddy workmanship and white flight, the company went under, "resurrected" only by massive federal aid, robot assemblers and hi-tech. Manufacturers who still cling to the Yankee work ethic face the choice of: 1) moving to a white area where craftsmanship can be found (GM is moving to Tennessee), 2) moving to Japan (yellow is cheaper), 3) staying (and decaying) or giving up (Maytag said it would cease production if it had to hire minorities).
GUARANTEED JOBS
Leftists say "Buy American" when they mean: accept minorities. The solution is to cancel quotas -- remove minorities from the workforce -- so jobs can return home now from overseas. * * *
WHAT IS "BLACK HISTORY" ANYHOW?
No such thing. Nary a wheel, building or useful tool ever emanated from non-white Africa. Africanization aims to set up a tyranny of minorities over Americans.
The*41 newsletter also portrays Jews and Jewish groups in something less than a favorable light. According to an article in January 1988, headlined "Poinsett Debunks WW2 Gas Chamber Lies", Dr. Herbert Poinsett was "setting the record straight" that there was no mass extermination of Jews during World War II. As another example, from April 1988:
The Jews convict a retired Detroit auto-worker of "war-crimes" alleged before Israel even existed. President Reagan deports US citizens for death behind the Iron Curtain, at the behest of Jewish former Congresswoman Elizabeth Holtzman. Confessed Israeli spies are never even brought to trial.
JEWISH LOBBY TO BLAME
With presidential candidates and Congressional leaders vowing support for Arab-land-grabber Israel, Tel Aviv newspapers lately called Capitol Hill: "The best little Congress money can buy." The Jewish Lobby even maintains an Enemies List of Americans.
Nationalists have long called for voluntary Jewish repatriation abroad; meanwhile, returning Arab lands, cutting off Israel's favors, shutting down the Jewish Lobby and curbing Wall Street could keep Uncle Sam from being Uncle Stooge.
The November 1988 newsletter referred to B'nai*42 B'rith ADL as a "Jewish supremacist group" that was "founded to whitewash the 'reputation' of Jewish murderer Leo Frank." The July 1990 issue stated that the Anti-Defamation League --
recently called for Nationalists to be prosecuted and even killed for pamphleteering and exercising free speech.
NATIONALISTS STAND UP TO PERSECUTION
ADL spokesman Simon Adler said in a news release from Hamilton, Canada, that Nationalists "must be stopped," in a thinly veiled bid for violence. Cohort, Gerald Swaye, head of the Jewish Federation, agreed that pro-majority activists must "pay the price," apparently even if killed by lawless street thugs. Another ADL supporter, Mark Silverberg, said in a tabloid interview that Nationalists should be compelled to "present themselves in court" as a result of passing out leaflets which called on neighbors to "Stand on Guard" against minority crime.
Homosexuals are also newsletter editorial targets. Appearing in December 1988 was a call to prepare for a march on Washington, D.C., to take it back from those "Once called queers, then homosexuals, now 'gays' or alternative lifestylers":
Demand that queers be separated in society, removed from*43 jobs and deprived of any power. Insist on AIDS testing, defrocking of pro-queer clergymen and quarantine of all AIDS patients. Patronize only Americans who honor family, women, home and children.
The newsletter also makes derogatory references to other groups of people. For example, the February 1989 issue*44 contained a list of people who should be excluded from United States citizenship. Included on this list were "NON-AMERICANS: Boat people, wetbacks and aliens who are incompatible with American nationality and character, such as Nicaraguan refugees and Refusnik immigrants."
Since July 1989, one of petitioner's principal activities has been a prerecorded cable television program, a half-hour in length, which is available for viewing weekly in several markets across the country. The program format of these "N-TV" productions is usually an interview conducted by Barrett, but occasionally he appears without a guest. Members are encouraged to recommend potential guests, and topics have included art, law and order, labor unions, physical fitness, skinheads, and pornography.
Although the programs are not scripted, interview questions are typically discussed with a guest in advance, with an eye toward emphasizing the guest's point of view. During the interview, Barrett sometimes strays from the topic either to inject an opinion or to ask a question related to petitioner's philosophy. The guests are usually not members of petitioner, but their responses to Barrett's questions are generally*45 consistent with his viewpoints. The programs include a disclaimer at the end that the views expressed are not necessarily those of "the broadcaster or N-TV".
In terms of time spent by petitioner's staff, a primary activity for petitioner since mid-1990 has been so-called social service work, offered to the public through a telephone counseling service.
*46 Petitioner's legal defense fund is itself a relatively important activity in terms of staff time. Emphasizing
First Amendment issues, the legal defense fund supports petitioner and its individual members and has also defended its one-time affiliated organization, the Forsyth County Defense League (the FCDL).Forsyth County v. Nationalist Movement , 505 U.S. 123">505 U.S. 123, 130, 112 S. Ct. 2395 (1992)Petitioner distributes descriptive price lists of audio cassettes (typically $ 8 for each 30 minutes of a speech, rally, or talk show), video cassettes (typically $ 29 or $ 35 for 30 minutes), books, pamphlets, and miscellaneous items such as flags. The accompanying order forms characterize the specified prices as "donations". Each issue of the monthly newsletter also has a "donation" order form for a short list of items, which include flags, T-shirts, patches, and video cassettes. All of the materials offered are closely connected with petitioner or its ideology, and for most of the audio and video cassettes (other than N-TV tapes), Barrett is the sole speaker or interviewee.
Most of the items that petitioner distributes in exchange for "donations" have been provided free to petitioner, many by Barrett. Barrett does not, however, receive any indirect compensation, such as royalties, when petitioner distributes the items. Funds received by petitioner for cassettes (other than N-TV tapes) and published materials are not substantial*48 relative to other funding sources, which consist primarily of membership dues, newsletter subscriptions, and voluntary contributions.
section 501(c)(3) by filing Form 1023, dated December 5, 1987, with the IRS. Barrett*49 was petitioner's representative throughout the administrative process. After several exchanges of correspondence, at least two telephone conferences, and three proposed adverse ruling letters, the IRS issued a final adverse ruling dated March 27, 1991, stating as the reasons:Your activities demonstrate that you are not operated exclusively for exempt charitable or educational purposes as required by
section 501(c)(3) . Furthermore, you are operated in furtherance of a substantial nonexempt, private purpose.Discussion I.
Introduction Section 501(a) generally exempts from Federal income taxation those organizations described insection 501(c) , which includes corporations --organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, * * * no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, * * * and which does not participate in, or intervene in * * * any political campaign on behalf of (or in opposition to) any*50 candidate for public office.
[Sec. 501(c)(3) .]section 501(c)(3) are generally deductible to donors.Sec. 170(a)(1) ,(c)(2) .Largely through constitutional arguments, petitioner here disputes respondent's determination that it does not qualify for exemption under
section 501(c)(3) . Petitioner also maintains that, consistent withsection 501(c)(3) , it operates exclusively for charitable and educational purposes.The facts and the administrative development of this case raise or suggest several issues that we do not here consider. For example, respondent explicitly abandons on brief an earlier administrative position that petitioner is an "action" organization pursuing legislation, a status that would preclude exemption. See
sec. 1.501(c)(3)-1(c)(3), Income Tax Regs. In addition, respondent does not contend that petitioner's ideas or its membership policies are invidiously discriminatory and thus contrary to public policy, although the IRS early in the administrative process challenged petitioner's membership policies on that ground. SeeBob Jones University v. United States , 461 U.S. 574">461 U.S. 574Church of Scientology of California v. Commissioner , 83 T.C. 381">83 T.C. 381823 F.2d 1310">823 F.2d 1310 (9th Cir. 1987). Respondent also has not attempted on brief to invoke certain standards arguably applicable to organizations with publishing activities. SeeRev. Rul. 77-4, 1 C.B. 141">1977-1 C.B. 141 ;Rev. Rul. 67-4, 1 C.B. 121">1967-1 C.B. 121 . *52 II.Preliminary Matters The function of the Court in a declaratory judgment proceeding under
section 7428 is ordinarily limited to a review of the administrative determination, with the petitioner having the burden of proof.Rule 217(c)(2)(A) ;Church in Boston v. Commissioner , 71 T.C. 102">71 T.C. 102Houston Lawyer Referral Serv., Inc. v. Commissioner , 69 T.C. 570">69 T.C. 570Rule 217(a) .Petitioner attached an 87-page appendix to its answering brief, which prompted respondent to file a motion to strike both certain items in the appendix and references to those items in the textual body of the brief. The essence of respondent's objection is that the appendix contains materials not in the administrative record, including newspaper and magazine excerpts and publications distributed by apparently exempt organizations.
Petitioner filed a response*53 to respondent's motion to strike, maintaining that it is not in violation of
Rule 217(a) . The grounds for this position are, first, that the appendix is a "Brandeis Brief" helpful to the Court in reaching a just result and, second, that the appendix is complementary to the administrative record. Petitioner also filed, in the alternative, a motion to supplement the administrative record, essentially incorporating the same grounds.The so-called Brandeis brief, whose name derives from the brief authored by eventual Supreme Court Justice Louis Brandeis in
Muller v. Oregon , 208 U.S. 412">208 U.S. 412Snyder v. Commissioner , 93 T.C. 529">93 T.C. 529, 533-534 (1989)Snyder do not change our thinking. Accepting petitioner's appendix as a Brandeis brief would undermine the rationale and result inThe Nationalist Movement v. Commissioner , T.C. Memo 1992-698">T.C. Memo. 1992-698*55 Petitioner argues that the appendix materials are relevant to petitioner's arguments involving respondent's conduct toward other organizations, and are complementary to the administrative record. However, although we did not decide the merits of petitioner's arguments regarding disparate treatment in
The Nationalist Movement v. Commissioner ,supra Petitioner has failed to show why it could not have raised this issue during the administrative stage of this case and thus have developed the administrative record in support of its allegation. * * * Petitioner has failed to show that it had neither the opportunity nor the ability to develop at the administrative stage its claim of disparate treatment. * * * [
Id. ]In sum, petitioner has not persuaded us that it is in compliance with the general constraints of
Rule 217(a) , nor has petitioner shown good cause to supplement the administrative record. Accordingly, respondent's motion to strike will be granted, and petitioner's motion to supplement the administrative record will be denied. We note that respondent has declined to object*56 specifically to certain portions of petitioner's appendix, including responses to respondent's proposed findings of fact under Rule 151(e)(3). The parts of the appendix that are apparently acceptable to respondent will not be stricken.Respondent attached an even longer appendix to her opening brief, consisting of unofficial transcripts of the audio and video cassettes in the administrative record. Although we have no pending motion from petitioner concerning respondent's appendix, petitioner contends on brief that the transcripts contain many inaccuracies. For our part, we have listened to and viewed the actual tapes and have not assigned any independent evidentiary significance to respondent's transcripts.
III.
Public Versus Private Interest An organization does not operate exclusively for exempt purposes if it more than incidentally serves a private interest, such as that of the creator or designated individuals, rather than a public interest.
Sec. 1.501(c)(3)-1(d)(1)(ii), Income Tax Regs. ; seeKentucky Bar Foundation, Inc. v. Commissioner, 78 T.C. 921">78 T.C. 921section 501(c)(3) that an exempt organization have "no part of the net earnings * * * [inuring] to the benefit of any private shareholder or individual".Retired Teachers Legal Defense Fund v. Commissioner , 78 T.C. 280">78 T.C. 280Goldsboro Art League, Inc. v. Commissioner , 75 T.C. 337">75 T.C. 337With reliance on
Christian Manner International v. Commissioner, 71 T.C. 661">71 T.C. 661Save the Free Enterprise System, Inc. v. Commissioner , T.C. Memo. 1981-388Church of Vis. Intell. That Governs Universe v. United States , 4 Cl. Ct. 55">4 Cl. Ct. 55Bubbling Well Church v. Commissioner , 74 T.C. 531">74 T.C. 531670 F.2d 104">670 F.2d 104 (9th Cir. 1981).In
Save the Free Enterprise System, Inc. v. Commissioner ,supra Id. Although Barrett in his various capacities with petitioner sometimes draws upon and relates his personal experiences, the administrative record in the instant case does not suggest anywhere near the same kind or degree of retaliatory personal attack.In
Christian Manner International v. Commissioner ,supra section 501(c)(3) . We first found that the organization's primary activity was the distribution, promotion, and sale of books written by its sole employee, the president.Id. at 666-667Id. at 669Respondent argues that Barrett's status with petitioner similarly provides him with a captive forum for widespread dissemination of his personal views. What respondent fails to acknowledge, however, is our emphasis in
Christian Manner International on the commercial nature of the book activity. We there stated that "the principal purpose served was commercial in nature and for the private benefit" of the employee,id. , and we later expanded on the commercial aspects without further specific reference to the significance of a ready "outlet".Id. at 670Respondent also asserts that petitioner operates for Barrett's private benefit by promoting his personal career ambitions in politics. The record does not support respondent's position. Although Barrett's political ambitions were evident when he ran for the Mississippi legislature in 1970 and for the governorship in 1980, we see nothing in the record suggesting current ambitions along these lines.
IV.
Specific Activities and the Operational Test To come within the terms of
section 501(c)(3) , an organization must operate "exclusively" for tax-exempt purposes. This does not mean, however, "solely" or "absolutely without exception".Church in Boston v. Commissioner , 71 T.C. at 107Better Business Bureau v. United States , 326 U.S. 279">326 U.S. 279Copyright Clearance Center, Inc. v. Commissioner , 79 T.C. 793">79 T.C. 793American Campaign Academy v. Commissioner, 92 T.C. 1053">92 T.C. 1053As stated in the regulations, the "operational test" is as follows:
An organization will be regarded as "operated exclusively" for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified insection 501(c)(3) . An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.[Sec. 1.501(c)(3)-1(c)(1), Income Tax Regs. ]
The purposes toward which an organization directs its activities, and not the nature of the activities themselves, determine whether the oganization meets the operational test.B.S.W. Group, Inc. v. Commissioner , 70 T.C. 352">70 T.C. 352Of the exempt purposes listed in
section 501(c)(3) , petitioner maintains that it operates primarily for charitable purposes and secondarily for educational purposes.A.
Charitable Purpose The term "charitable" is used*62 in
section 501(c)(3) in its generally accepted legal sense and is, therefore, not to be construed as limited by the separate enumeration insection 501(c)(3) of other tax-exempt purposes which may fall within the broad outlines of "charity" as developed by judicial decisions. Such term includes: Relief of the poor and distressed or of the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening of the burdens of Government; and promotion of social welfare by organizations designed to accomplish any of the above purposes, or (i) to lessen neighborhood tensions; (ii) to eliminate prejudice and discrimination; (iii) to defend human and civil rights secured by law; or (iv) to combat community deterioration and juvenile delinquency. * * *[Sec. 1.501(c)(3)-1(d)(2), Income Tax Regs. ]Petitioner has consistently argued that its activities, in one way or another, touch on virtually all of the charitable categories listed in
section 1.501(c)(3)-1(d)(2), Income Tax Regs. Our concern under the operational test, however, is not how diverse petitioner's allegedly charitable activities are, *63 but whether petitioner engages primarily in activities that accomplish exempt purposes. SeeColumbia Park & Recreation Association v. Commissioner , 88 T.C. 1">88 T.C. 1838 F.2d 465">838 F.2d 465 (4th Cir. 1988);sec. 1.501(c)(3)-1(c)(1), Income Tax Regs. Toward the end of the administrative process, petitioner estimated that its purportedly charitable activities of social service work and legal work consumed nearly half of its staff time.Petitioner considers its social service work to consist of, at least largely, its telephone counseling line begun in 1990. Respondent has published several rulings concluding that personal counseling*64 serves exempt educational purposes. See, e.g.,
Rev. Rul. 78-99, 1 C.B. 152">1978-1 C.B. 152 ;Rev. Rul. 74-595, 2 C.B. 164">1974-2 C.B. 164 ;Rev. Rul. 73-569, 2 C.B. 178">1973-2 C.B. 178 . If truly for exempt purposes, whether petitioner's counseling is considered charitable or educational is not important; qualification undersection 501(c)(3) is not dependent upon how appropriately the organization categorizes its purposes.Sec. 1.501(c)(3)-1(d)(1)(iii), Income Tax Regs. The record is vague and inconsistent concerning petitioner's purported social service work. Petitioner initially wrote the IRS that calls for counseling services through September 1990 numbered "Up to approximately 30 per day". When subsequently asked, in December 1990, for the number of "social service work" inquiries received per month, petitioner wrote in reply: "Approximately in excess of 100". When asked whether it advertised its social services other than in the local yellow pages, petitioner wrote in response a simple "Yes", with no elaboration on where, when, or how. When asked about any special training either*65 provided to or possessed by staff members, petitioner wrote that there was indeed special training, referring to written "Counseling Guidelines" as support. These guidelines, contained within a single page, neither mention nor imply the need for any special training. Still on the subject of special training, petitioner also wrote that incoming calls are "largely" referred to Barrett, a practicing attorney with college credits in psychology, education, and "related fields".
Petitioner has the burden of proof on those grounds set forth in respondent's final adverse ruling, which include a failure to operate exclusively for exempt purposes.
Rule 217(c)(2)(A) . Petitioner must supply sufficient information about its principal activities to warrant a conclusion that it operates in furtherance of exempt purposes.La Verdad v. Commissioner , 82 T.C. 215">82 T.C. 215World Family Corp. v. Commissioner , 81 T.C. 958">81 T.C. 958Basic Bible Church v. Commissioner , 74 T.C. 846">74 T.C. 846Granzow v. Commissioner , 739 F.2d 265">739 F.2d 265General Conf. of the Free Church v. Commissioner , 71 T.C. 920">71 T.C. 920Church in Boston v. Commissioner , 71 T.C. at 106-107Within the definition of "charitable" is the promotion of social welfare, through the defense of human and civil rights secured by law.
Retired Teachers Legal Defense Fund v. Commissioner , 78 T.C. at 288sec. 1.501(c)(3)-1(d)(2), Income Tax Regs. Unlike telephone counseling, petitioner's legal work, which emphasizes constitutional issues, has been an ongoing and important activity throughout petitioner's corporate existence. Moreover, petitioner provides free legal assistance on occasion to the poor, and relief of the poor is considered a charitable purpose.Sec. 1.501(c)(3)-1(d)(2), Income Tax Regs. ; seeRev. Rul. 78-428, 2 C.B. 177">1978-2 C.B. 177 .In most of the litigation undertaken, however, petitioner itself, *67 rather than an individual, has been the party in interest. In essence, petitioner has often engaged in litigation to protect its own interests, though such litigation may have broader implications. As a notable example, petitioner recently prevailed in a Supreme Court case,
Forsyth County v. Nationalist Movement , 505 U.S. 123">505 U.S. 123First Amendment cases in which it or its one-time affiliate, the FCDL, had *68 been a party. One such listing was as follows: "To secure the right of citizens to peacefully assemble (TNM v. Cumming, 1990)." On brief, petitioner identifies the courts that had jurisdiction over these cases, but, apart fromForsyth County v. Nationalist Movement ,supra Despite the clear implication that any opinions in these cases were unpublished, petitioner has not been deterred from offering grandiose descriptions of its legal accomplishments. In an April 1989 letter to the IRS, petitioner referred to winning an unspecified "civil rights' [sic] lawsuit against a municipality who had denied local citizens their right to assemble in public", a description consistent with litigation involving the City of Natchez. In prevailing, according to petitioner, "we advanced the civil and constitutional rights of all Americans." Elsewhere in the same letter, petitioner stated: "We recently won an historic legal case in which we assured that the poor are not compelled to pay certain court costs." Similarly, petitioner earlier had informed the IRS of a "landmark ruling" in Mississippi Federal court benefiting "all*69 the poor and underprivileged everywhere."
On brief, petitioner counts among its many "contributions to the nation's jurisprudence" in the "public interest" --
the extension of the rights of citizens to peacefully assemble, the right of citizens to petition the government, the right of citizens to speak in public, the right of the poor to exercise their
First Amendment rights, the access of the poor to the courts and the right of those exercisingFirst Amendment rights to be free from intimidation.Admittedly, even an unpublished decision can have implications beyond the immediate parties, such as when the decision compels a governmental entity to alter its enforcement or administrative practices. Here, however, petitioner provides very little detail about its litigation, so for any given case (other than petitioner's case in the Supreme Court) we have no way of knowing the precise constitutional issues raised, petitioner's expectations about public impact, the rationale of the decision, the type and scope of relief, and the potential implications to the public. *70 Cf.
Rev. Proc. 92-59, 2 C.B. 411">1992-2 C.B. 411 , 411-412 (public interest law firms seeking exemption rulings should show a "broad public interest" and should annually file "a description of cases litigated and the rationale for the determination that they would benefit the public generally"); Chisolm, "Exempt Organization Advocacy: Matching the Rules to the Rationales",63 Ind. L.J. 201">63 Ind. L.J. 201 , 210-214, 285-287 (1987).San Francisco Infant School v. Commissioner , 69 T.C. 957">69 T.C. 957, 964-966 (1978)Rev. Rul. 80-278, 2 C.B. 175">1980-2 C.B. 175 (environmental litigation furthered exempt purposes and was reasonably related to accomplishment of such purposes).B.
Educational Purpose 1.
Constitutional Issues Petitioner, which devotes most of its briefs to constitutional arguments, maintains that the following revenue rulings and revenue procedure relied upon by the IRS during the administrative process are unconstitutional, both facially and as applied:
Rev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 (sometimes referred to herein as the revenue procedure);Rev. Rul. 68-263, 1 C.B. 256">1968-1 C.B. 256 ;Rev. Rul. 66-256, 2 C.B. 210">1966-2 C.B. 210 ; andRev. Rul. 62-71, 1 C.B. 85">1962-1 C.B. 85 . All four relate to whether an organization is tax exempt undersection 501(c)(3) . With reliance on the1st ,5th , and14th Amendments , petitioner asserts that these revenue rulings and revenue procedure are vague and overbroad in that, *72 first, they do not give proper notice as to the nature of the proscribed conduct or speech, and second, they are susceptible of application in an unreasonable, arbitrary, and capricious manner. These alleged shortcomings, according to petitioner, unreasonably inhibit or infringeFirst Amendment rights.Respecting petitioner's claims of vagueness and overbreadth, we will limit our consideration to
Rev. Proc. 86-43 ,supra , which addresses whether advocacy by an organization is educational within the meaning ofsection 501(c)(3) .Rev. Rul. 62-71 ,supra , concludes that the subject organization is an "action" organization not eligible for exemption, a position already abandoned in this case by respondent. The remaining two revenue rulings are, in our view, subsumed in the revenue procedure, and nothing would be gained by according them independent significance.a.
Background of Rev. Proc. 86-43 The regulation at the focus of petitioner's constitutional arguments is
section 1.501(c)(3)-1(d)(3)(i), Income Tax Regs. , which provides:(3)
Educational *73defined -- (i)In general. The term "educational", as used insection 501(c)(3) , relates to --(a) The instruction or training of the individual for the purpose of improving or developing his capabilities; or
(b) The instruction of the public on subjects useful to the individual and beneficial to the community.
An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. On the other hand, an organization is not educational if its principal function is the mere presentation of unsupported opinion.
Big Mama Rag, Inc. v. United States , 631 F.2d 1030">631 F.2d 1030 (D.C. Cir. 1980)First Amendment , in part because the "full and fair exposition" standard is too imprecise to engender objective application.Id. at 1039Id. at 1038-1039National Alliance v. United States , 710 F.2d 868">710 F.2d 868Later still, in section 3 of
Rev. Proc. 86-43 ,supra , the IRS set forth the criteria to be used in determining whether advocacy is educational undersection 501(c)(3) :.01 The Service recognizes that the advocacy of particular viewpoints or positions may serve an educational purpose even if the viewpoints or positions being advocated are unpopular or are not generally accepted.
.02 Although the Service renders no judgment as to the viewpoint or position of the organization, the Service will look to the method used by the organization to develop and present its views. The method used by the organization will not be considered educational*76 if it fails to provide a factual foundation for the viewpoint or position being advocated, or if it fails to provide a development from the relevant facts that would materially aid a listener or reader in a learning process.
.03 The presence of any of the following factors in the presentations made by an organization is indicative that the method used by the organization to advocate its viewpoints or positions is not educational.
1 The presentation of viewpoints or positions unsupported by facts is a significant portion of the organization's communications.
2 The facts that purport to support the viewpoints or positions are distorted.
3 The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of strong emotional feelings than of objective evaluations.
4 The approach used in the organization's presentations is not aimed at developing an understanding on the part of the intended audience or readership because it does not consider their background or training in the subject matter.
.04 There may be exceptional circumstances, however, where an organization's advocacy may be educational even if one *77 or more of the factors listed in section 3.03 are present. The Service will look to all the facts and circumstances to determine whether an organization may be considered educational despite the presence of one or more of such factors. [
Id. at 729-730The four factors in section 3.03 of the revenue procedure had earlier been the foundation of an IRS "methodology test", which was advanced during the course of the
National Alliance litigation as an elaboration of the "full and fair exposition" standard previously deemed unconstitutionally vague inBig Mama Rag, Inc., v. United States ,supra .National Alliance v. United States ,supra at 870, 874National Alliance had found it unnecessary to resolve whether the methodology test would cure the vagueness of the regulation.Id. at 875-876b.
Constitutionality of Rev. Proc. 86-43 Despite the apparent similarity between petitioner and the organization in
National Alliance , we decline to decide this case based on an analysis of whether petitioner was educational*78 within any reasonable interpretation of the statutory term, which was the approach utilized by the court inNational Alliance . At the time theNational Alliance case was decided, the methodology test was merely an argument raised by the IRS in the context of that litigation.Id. at 870Revenue Procedure 86-43 ,supra . Although revenue procedures are not binding on this Court,Estate of Lang v. Commissioner , 64 T.C. 404">64 T.C. 404613 F.2d 770">613 F.2d 770 (9th Cir. 1980), they do constitute official statements of IRS procedure.Rev. Proc. 89-14, 1 C.B. 814">1989-1 C.B. 814 . Accordingly, we cannot avoid, as did the court inNational Alliance , considering the constitutionality of the revenue procedure's methodology test as applied by respondent to petitioner.The essence of petitioner's argument is that, by denying tax exemption, respondent is attempting to suppress ideas with which she does not agree. Petitioner further contends that *79 its viewpoints are constitutionally protected as commentary on issues of public concern.
Denial of a tax exemption for engaging in speech consisting of "dangerous ideas" can be a discriminatory limitation on free speech.
Speiser v. Randall , 357 U.S. 513">357 U.S. 513American Communications Association v. Douds , 339 U.S. 382">339 U.S. 382Regan v. Taxation with Representation of Wash. , 461 U.S. 540">461 U.S. 540First Amendment rights.Cammarano v. United States , 358 U.S. 498">358 U.S. 498Christian Echoes Natl. Ministry, Inc. v. United States , 470 F.2d 849">470 F.2d 849General Conf. of the Free Church v. Commissioner , 71 T.C. at 931First Amendment rights are somehow not fully realized*80 unless they are subsidized by the State."Cammarano v. United States ,supra at 515Regan v. Taxation with Representation of Wash. ,supra at 546, 548Haswell v. United States , 205 Ct. Cl. 421">205 Ct. Cl. 421The constitutional foundation of the void-for-vagueness doctrine is due process, which requires, first, fair notice of proscribed conduct and, second, explicit standards for Government officials who might otherwise engage in arbitrary and discriminatory enforcement.
Grayned v. City of Rockford , 408 U.S. 104">408 U.S. 104Papachristou v. City of Jacksonville , 405 U.S. 156">405 U.S. 156Kolender v. Lawson , 461 U.S. 352">461 U.S. 352Hoffman Estates v. Flipside, Hoffman Estates , 455 U.S. 489">455 U.S. 489First Amendment applications.Smith v. Goguen , 415 U.S. 566">415 U.S. 566Baggett v. Bullitt , 377 U.S. 360">377 U.S. 360Under the overbreadth doctrine in the context of the
First Amendment , a court may find a law void on its face for sweeping too broadly and thereby restricting or punishing speech that is constitutionally protected. See, e.g.,Airport Commissioners v. Jews for Jesus, Inc. , 482 U.S. 569 (1987)Brockett v. Spokane Arcades, Inc. , 472 U.S. 491">472 U.S. 491City Council v. Taxpayers for Vincent , 466 U.S. 789">466 U.S. 789New York v. Ferber , 458 U.S. 747">458 U.S. 747Broadrick v. Oklahoma , 413 U.S. 601">413 U.S. 601Under one branch of the overbreadth doctrine, a law may be void for granting overly broad discretion to a decisionmaker, such as a licensing authority or a police officer. See, e.g.,
Lakewood v. Plain Dealer Pub. Co. , 486 U.S. 750 (1988)Houston v. Hill , 482 U.S. 451 (1987)Forsyth County v. Nationalist Movement , 505 U.S. at 129, 112 S. Ct. at 2401Lakewood v. Plain Dealer Pub. Co. ,supra at 759Secretary of State of Md. v. J.H. Munson Co. , 467 U.S. 947">467 U.S. 947Thornhill v. Alabama , 310 U.S. 88">310 U.S. 88Petitioner makes clear that its main constitutional objection to
Rev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 , is excessive administrative*83 discretion, which is an analytical link between the doctrines of vagueness and overbreadth. Indeed, the two are "logically related and similar doctrines."Kolender v. Lawson ,supra at 358-359 n.8100 Yale L.J. 853">100 Yale L.J. 853 , 903-907 (1991). Our analysis, accordingly, does not follow two separate paths.Our starting point is
Big Mama Rag, Inc. v. United States , 631 F.2d 1030">631 F.2d 1030section 1.501(c)(3)-1(d)(3)(i), Income Tax Regs. , unconstitutionally vague. We note first that the same court later spoke approvingly, albeit in dictum, about the informal methodology test that served as the forerunner of the published revenue procedure:starting from the breadth of terms in the regulation, application by IRS of the Methodology Test would move in the direction of more specifically requiring, in advocacy material, an intellectually appealing development of the views*84 advocated. The four criteria tend toward ensuring that the educational exemption be restricted to material which substantially helps a reader or listener in a learning process. The test reduces the vagueness found by the
Big Mama decision. [National Alliance v. United States , 710 F.2d at 875This positive view of the methodology test, and hence the revenue procedure, does not appear to be inconsistent with the reasoning in
Big Mama Rag . The court in the latter case was concerned that the standard insection 1.501(c)(3)-1(d)(3), Income Tax Regs. , seemed to incorporate the individualistic and unascertainable reactions of members of the public.Big Mama Rag, Inc. v. United States ,supra at 1037Coates v. City of Cincinnati , 402 U.S. 611">402 U.S. 611Coates , which involved an ordinance prohibiting sidewalk conduct "annoying to persons passing by".Id. ; see Tribe,supra , sec. 12-32, at 1036. The court was also troubled by the uncertainty surrounding*85 the disqualifying degree of "unsupported opinion"; namely, whether it had to be the "principal function" of the organization.Big Mama Rag, Inc. v. United States ,supra at 1037sec. 1.501(c)(3)-1(d)(3)(i), Income Tax Regs. ). The revenue procedure now clarifies that viewpoints unsupported by facts may preclude an educational purpose if such presentations constitute a "significant portion of the organization's communications", even if such presentations are not the organization's principal function.Rev. Proc. 86-43 ,supra at 730Petitioner apparently reads the revenue procedure to require organizations to present and rebut opposing views, and it is certainly true that such a presentation does not detract from educational status. See
National Association for Alternative Schools v. Commissioner , 71 T.C. 118">71 T.C. 118Secretary of State of Md. v. J.H. Munson Co. ,supra at 962-968id. at 983 n.3National Foundation v. City of Fort Worth , 415 F.2d 41">415 F.2d 41We are also not impressed with the authority cited by petitioner in support of its constitutional arguments. Petitioner extensively cites
Lakewood v. Plain Dealer Pub. Co. , 486 U.S. 750 (1988)Id. at 753-754Lakewood . Seeid. at 755, 757, 770, 772Petitioner also relies heavily on
Federal Election Commission v. Massachusetts Citizens for Life, Inc. , 479 U.S. 238">479 U.S. 238Id. That case involved neither
section 501(c)(3) specifically nor tax exemption generally. Indeed, the Court distinguished a situation in which a corporation might be ineligible to receive deductible contributions: "Such a result * * * would infringe no protected activity, for there is no right to have speech subsidized by the Government."Id. at 256 n.9Boos v. Barry , 485 U.S. 312">485 U.S. 312100 Yale L.J. 853">100 Yale L.J. 853 , 865 (1991). As we conclude below, the revenue procedure has only a minimal risk of being applied to favor or disfavor certain types of speech content.Elsewhere, the Supreme Court has acknowledged that one consideration in a vagueness challenge is whether it would have been practical to draft more precisely. See
United States Civil Serv. Commission v. National Association of Letter Carriers , 413 U.S. 548">413 U.S. 548United States v. Petrillo , 332 U.S. 1">332 U.S. 1Kolender v. Lawson , 461 U.S. at 361109 U. Pa. L. Rev. 67">109 U. Pa. L. Rev. 67 , 95 n.150 (1960). Congress did not intend the word "educational" insection 501(c)(3) to embrace every ongoing dissemination of information,National Alliance v. United States , 710 F.2d at 873Id. ;Big Mama Rag, Inc. v. United States , 631 F.2d at 1035, 1040In our view,
Rev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 , is not unconstitutionally vague or overbroad on its face, nor is it unconstitutional as applied. Its provisions are sufficiently understandable, specific, and objective both to preclude chilling of expression protected under theFirst Amendment and to minimize arbitrary or discriminatory*91 application by the IRS. The revenue procedure focuses on the method rather than the content of the presentation. In contrast, it was the potential for discriminatory denials of tax exemption based on speech content that caused the Court of Appeals for the District of Columbia Circuit to hold that the vagueness of the "full and fair exposition" standard violates theFirst Amendment .Big Mama Rag., Inc. v. United States ,supra at 1034National Alliance v. United States ,supra .Regan v. Taxation with Representation of Wash. , 461 U.S. at 5482.
Newsletter as Educational Petitioner maintains on brief that its principal educational activities are "discussions, forums and television interviews". Perhaps not coincidentally, this description is similar to an example in the regulations of an organization deemed educational. See
sec. 1.501(c)(3)-1(d)(3)(ii), Income Tax Regs. ,Example (2 ); see alsoRev. Rul. 76-4, 1 C.B. 145">1976-1 C.B. 145 *92 (production of noncommercial cable television programs was for educational purpose). In a departure from its position during the administrative process, petitioner has downgraded the status of its monthly newsletter. Because circulation is restricted to members and nonmember subscribers, asserts petitioner, there is no real intention to educate the general public. SeePhi Delta Theta Fraternity v. Commissioner , 90 T.C. 1033">90 T.C. 1033887 F.2d 1302">887 F.2d 1302 (6th Cir. 1989);National Association for Alternative Schools v. Commissioner , 71 T.C. at 122Whether an activity is substantial is a facts-and-circumstances inquiry not always dependent upon time or expenditure percentages.
Manning Association v. Commissioner , 93 T.C. 596">93 T.C. 596Church in Boston v. Commissioner , 71 T.C. at 108The newsletter contains a disclaimer to the effect that the views presented are not necessarily those of petitioner. Such a disclaimer is perhaps meaningful when applied to, for example, some of the people quoted in the newsletter. However, given that the newsletter editor is Barrett, who serves as chairman and chief spokesman of petitioner, the disclaimer does not insulate petitioner from the views presented by him in the newsletter. Cf.
Federal Election Commission v. Massachusetts Citizens for Life, Inc. , 479 U.S. at 249The administrative record contains over 20 monthly issues of petitioner's newsletter. Neither party contends that they are unrepresentative, and we have reviewed them all. We now turn to an examination of how they hold up under the standards of
Rev. Proc. 86-43, 2 C.B. 729">1986-2 C.B. 729 . *96 The test contained in the revenue procedure focuses on "the method used by the organization to develop and present its views."Id. at 729Id. at 729-730Id. at 730The first listed indicator of a noneducational method is that "The presentation of viewpoints or positions unsupported by facts is a significant portion of the organization's communications."
Id. at 730No such thing. Nary a wheel, building or useful tool ever emanated from non-white Africa. Africanization aims to set up a tyranny of minorities over Americans.
Although some viewpoints presented in the newsletters are based on purported facts, and the newsletters contain some apparently neutral communications, such as the listing of upcoming events, the above examples, as well as others, demonstrate that a significant portion of the newsletters consists of the presentation of viewpoints unsupported by facts. See also
National Alliance v. United States , 701 F.2d at 873 ("As the truth of the view asserted*98 becomes less and less demonstrable, * * * 'instruction' or 'education' must, we think, require more than mere assertion and repetition.").The second factor mentioned as indicative of a noneducational method is that "The facts that purport to support the viewpoints or positions are distorted."
Rev. Proc. 86-43 ,supra at 730The third indicator of a noneducational method is as follows: "The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of strong emotional feelings than of objective evaluations."
Id. This practice is prevalent in petitioner's newsletters. For example, petitioner refers to "queers" and "perverts" in the newsletter. In a vocabulary information sheet distributed by petitioner to supporters, these two words are described as good for "dramatic emphasis" and at least somewhat "caustic".In addition, the words "invasion" and "invaders" often appear in the newsletter, usually to describe the January 1987 march in Forsyth County, Georgia, and its "black-power" participants. The November 1987 newsletter urged readers to prepare "to purify the ground defiled by the * * * Invaders". Similarly, an audio cassette distributed by petitioner was entitled "We Cleanse This Ground of the Invaders' Stain". Barrett himself was quoted in the January 1988 newsletter as saying: "'Just say no' to the never-ending demands of rioters, looters, burners and invaders". In the same issue and other *100 issues of the newsletter, those resisting the "invaders" were characterized as "patriots" and "martyrs". A "patriot", as defined in petitioner's vocabulary information sheet, is "A lover of his country; a Nationalist".
Based upon these and similar examples, we conclude that petitioner's newsletter comes within the terms of the third of the factors in the revenue procedure that are indicative of a noneducational method.
The fourth and final disqualifying factor is as follows: "The approach used in the organization's presentations is not aimed at developing an understanding on the part of the intended audience or readership because it does not consider their background or training in the subject matter."
Rev. Proc. 86-43, 1986-2 C.B. at 730 .The administrative record leaves no doubt that young people are at least a substantial portion of petitioner's intended readership for the newsletter. The average age of petitioner's members, who have an automatic subscription to the newsletter, is in the low twenties. In addition, petitioner's literature refers to young people in glowing terms such as "mainstay" and "seedbed". Direct appeals in the*101 newsletter to young readers include the solicitation of volunteers to work at headquarters or to become Strikers and an occasional short "Inspiration to Youth" segment. In addition to the many references to "youth and workers" and "youth and working people" in the newsletter, other indirect indications that young people are intended readers include articles about activities of students, skinheads, and Strikers, articles about recruitment efforts directed toward skinheads and other "youth", and articles about the youth-oriented priorities of headquarters personnel.
Petitioner derives much of its ideological impetus from the civil unrest of the 1960s. The newsletter, not surprisingly, often refers to news and events from that period, including legislation such as the Civil Rights Act and the Voting Rights Act. King, whose activities are the subject of so many negative references in the newsletter, was assassinated in 1968. Young readers, by virtue of age alone, might have a somewhat limited "background or training in the subject matter". We conclude that petitioner's newsletter does not educate its readership in the manner required by
section 501(c)(3) .Accordingly, petitioner's*102 newsletter is not in furtherance of an educational purpose within the meaning of
section 501(c)(3) andsection 1.501(c)(3)-1(d)(3), Income Tax Regs. Further, as earlier described, the publication and distribution of the newsletter comprise a substantial part of petitioner's overall activities. We therefore conclude that petitioner fails the operational test ofsection 1.501(c)(3)-1(c)(1), Income Tax Regs. V.
Due Process and Equal Protection Finally, again citing the
1st ,5th , and14th Amendments , petitioner argues that respondent has treated it differently than other organizations similarly situated, thereby violating its due process and equal protection rights. The14th Amendment provides that no State shall deny to any person the equal protection of the laws. Although theFifth Amendment , as applicable to the Federal Government, has noequal protection clause , its due process guarantees incorporate similar principles.Regan v. Taxation with Representation of Wash. , 461 U.S. at 542 n.2Bolling v. Sharpe , 347 U.S. 497">347 U.S. 497This Court has historically taken a restrained and cautious approach to alleged*103 IRS administrative inconsistency. See
Davis v. Commissioner , 65 T.C. 1014">65 T.C. 1014Penn-Field Industries, Inc. v. Commissioner , 74 T.C. 720">74 T.C. 720General Conf. of the Free Church v. Commissioner , 71 T.C. at 931Retired Teachers Legal Defense Fund v. Commissioner , 78 T.C. at 283As detailed in
The Nationalist Movement v. Commissioner , T.C. Memo 1992-698">T.C. Memo. 1992-698Using as a source IRS Publication 78, "Cumulative List of Organizations described in
Section 170(c) of the Internal Revenue Code of 1986 ", revised to September 30, 1989, petitioner points out that there are many listed organizations whose names begin with words of apparent ethnic, racial, or sexual partiality, such as "Black", "Hispanic", "Jewish", and "Gay". An important disparity, according to petitioner, is the conspicuous absence of "White" organizations, apart from geographical and family names. We are not impressed.One weakness in petitioner's argument is the unsupported assumption that such "White"-named organizations have even applied for exemption. Moreover, we need look no further*105 than National Alliance and petitioner itself to see that organizations favoring the white race do not necessarily use the word "White" to begin their names. In any event, a name without more is insufficient for us to decide that any organization is similarly situated to petitioner in terms of its activities or purposes. Petitioner implicitly acknowledges its proof problems by referring on brief to how it "suspects" respondent acts toward other organizations and by referring to what respondent "apparently" or "likely" does.
The administrative record, through petitioner's correspondence with the IRS, does include some published materials apparently distributed by or related to exempt organizations. Petitioner submitted most of these, however, to support specific positions either no longer in dispute or unrelated to the purported educational nature of the material. An exception is a newsletter from an organization with clear conservative leanings, which petitioner asserts fares no better than petitioner's newsletter under educational standards such as those in
Rev. Proc. 86-43 ,supra . Even this attempt at proof fails petitioner. A *106 donation solicitation form accompanying the newsletter suggests that an affiliate of the organization, not the organization itself, is tax exempt.Based upon the foregoing, we sustain respondent's determination that petitioner does not qualify for exemption under
section 501(c)(3) .An order will be issued granting respondent's motion to strike material from petitioner's rebuttal brief and denying petitioner's motion to supplement the administrative record. Decision will be entered for respondent. Footnotes
1. Unless otherwise indicated, section references are to the Internal Revenue Code of 1986. Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. During the administrative process with the IRS, petitioner represented that it would no longer advocate the passage or repeal of legislation.↩
3. An information sheet distributed by petitioner to supporters defines skinheads as "Nationalist, pro-majority youth who wear boots and cut their hair short and who lawfully engage in self-defense of their persons, schools, neighborhoods and nation."↩
4. References to black people are usually to "non-whites", "minorities", or "Negroes". According to the August 1988 issue, "black" is not used as a noun because "Communist Stokeley [sic] Carmichael coined use of 'black' as part of his call for 'black power.' The word is demeaning to whites and to non-communists."↩
5. This event is described in some detail in
Forsyth County v. Nationalist Movement , 505 U.S. 123">505 U.S. 1236. An information sheet distributed by petitioner to supporters defines "Queers" as "Misfits, perverts, deviates * * *. All are good words for dramatic emphasis, on occasion. However, 'minority' is often better, less caustic."↩
7. Petitioner also began to publicize a "free tip hotline" in 1990, consisting of recorded messages about current events, after which the caller could leave a message if desired.↩
8. This entity, which was actually the forerunner of petitioner, was wound up and dissolved during the administrative process.↩
9. During the administrative process, petitioner discontinued distribution of "The Commission" and those audio cassettes recorded by Barrett prior to the existence of petitioner. Less than 10 copies of the book had been distributed by petitioner.↩
10. Understandably, respondent does not argue that "donations" to petitioner for tangible goods are nondeductible quid pro quo payments, in whole or in part, under
sec. 170 . SeeHernandez v. Commissioner , 490 U.S. 680 (1989)819 F.2d 1212">819 F.2d 1212 (1st Cir. 1987), andGraham v. Commissioner , 822 F.2d 844">822 F.2d 84483 T.C. 575">83 T.C. 575 (1984);United States v. American Bar Endowment 477 U.S. 105">477 U.S. 105sec. 501(c)(3)↩ .11. In its historical context --
The purpose of the social science brief, or "Brandeis Brief," was to convince the [Supreme] Court that social science data existed that justified the statute at issue and thus would make it pass muster under a test of reasonableness. This kind of evidence was particularly valuable during the era of substantive due process, for in that period the Court determined a statute's constitutionality by inquiring into its substantive reasonableness. The Brandeis Brief distinguishes adjudicative facts, which are established in the court, from legislative facts, data upon which the legislature relied, or could have relied, in drafting its statute. * * * [Hovenkamp, "Social Science and Segregation before
Brown ",1985 Duke L.J. 624">1985 Duke L.J. 624 , 628↩ n.15 (1985).]12. Petitioner's full list of estimates is as follows: Social service, 25%; legal (
First Amendment↩ ), 20%; TV, broadcasting, 20%; administration, 10%; publishing, 10%; forums, speeches, 5%; classes, training, 5%; and miscellaneous, 5%.13. We recognize that the Supreme Court resolution of this case is not a part of the administrative record before us. Nonetheless, the controversy and some lower court activity are mentioned in the record. In these circumstances, we take judicial notice of the culmination of the litigation.↩
14. Although petitioner's newsletter often refers to the successful endeavors of the legal defense fund, it fails to communicate even the barest essentials of the cases. Cf.
National Association for Alternative Schools v. Commissioner , 71 T.C. 118">71 T.C. 11815. For a detailed history of the educational exemption as administered by the IRS, see Thompson, "The Availability of the Federal Educational Tax Exemption for Propaganda Organizations",
18 U.C. Davis L. Rev. 487">18 U.C. Davis L. Rev. 487↩ (1985).16. The Tax Court considered the alleged unconstitutional vagueness of regulations under
sec. 501(c)(3) inRetired Teachers Legal Defense Fund v. Commissioner , 78 T.C. 280">78 T.C. 280sec. 1.501(c)(3)-1(d)(3), Income Tax Regs. Id. at 284-285Id.↩ at 28417. It is also doubtful whether such a requirement would be appropriate even apart from vagueness and overbreadth considerations. See
Big Mama Rag, Inc. v. United States , 631 F.2d 1030">631 F.2d 103018 U.C. Davis L. Rev. 487">18 U.C. Davis L. Rev. 487 , 510 n.48,527 n.89 (1985) ↩.18. Perhaps fearing the unfavorable implications, petitioner did not respond to a written IRS inquiry about how many staff people are involved in producing the newsletter. Cf.
Wichita Terminal Elevator Co. v. Commissioner , 6 T.C. 1158">6 T.C. 1158162 F.2d 513">162 F.2d 513↩ (10th Cir. 1947) (presumption that unproduced evidence is unfavorable).19. In addition to the newsletter, respondent cites Barrett's 1982 book, "The Commission", as evidence that petitioner is not educational within the meaning of
sec. 501(c)(3) . Petitioner, which did not itself publish the book, distributed only a handful of copies of the book before voluntarily ceasing distribution during the administrative process, apparently in the belief that such distribution was contributing to the view of the IRS that petitioner was operating for Barrett's private, nonexempt purposes. Under these circumstances, the book cannot reasonably be viewed as more than an insubstantial part of petitioner's activities, and its characterization as noneducational would not affect petitioner's status undersec. 501(c)(3) . Seesec. 1 ,501(c)(3)-1(c)(1), Income Tax Regs. ↩ Accordingly, we need not decide the validity of respondent's assertion that the book is noneducational.
Document Info
Docket Number： Docket No. 10540-91X
Citation Numbers： 102 T.C. 558, 1994 U.S. Tax Ct. LEXIS 24, 102 T.C. No. 22
Judges： HAMBLEN
Filed Date： 4/11/1994
Precedential Status： Precedential
Modified Date： 11/14/2024