An organization is eligible to receive tax-deductible contributions if it is organized and operated exclusively for exempt purposes. Section 170(c)(2)(B). To satisfy the organizational test, the congregation's assets must be dedicated to an exempt purpose on liquidation. Section 1.501(c)(3)-1(a)(4), Income Tax Regs. Although petitioner John J. Layden testified that he believed that the local congregation's assets would revert to the ULC, Inc. on dissolution, he produced no documentary evidence to support this testimony.
Mr. Layden failed to answer any questions concerning the operations of the local congregation.*264 He based his refusal on the ground that disclosure of the congregation's operations would interfere with his rights under the First Amendment. However, requiring a taxpayer to show that an organization satisfies the requirements of section 170(c) in order to permit deductions for contributions made to that organization constitutes, at most, an incidental burden on his right to freedom of religion. Hall v. Commissioner,729 F.2d 632">729 F.2d 632, 635 (9th Cir. 1984), affg. a Memorandum Opinion of this Court. Such a burden is constitutionally permissible. Unitary Mission Church v. Commissioner,74 T.C. 507">74 T.C. 507, 514 (1980), affd. without published opinion 647 F.2d 163">647 F.2d 163 (2d Cir. 1981). Additionally, petitioners produced no evidence which would indicate that none of the local congregation's funds inured to the benefit of any individual.
This Court informed Mr. Layden at trial that his failure to answer questions concerning his claim that the local congregation was a qualified tax-exempt organization could lead to the presumption that his answers, if given, would be unfavorable to his position. Wichita Terminal Elevator co. v. Commissioner,6 T.C. 1158">6 T.C. 1158, 1165 (1946)*265 affd. 162 F.2d 513">162 F.2d 513 (10th Cir. 1947). Mr. Layden failed to answer questions and produced no evidence concerning the organization and operation of the local congregation and the inurement of the congregation's earnings for the benefit of individuals. Accordingly, we infer that his answers, if given, and his evidence, if produced, would not support his position that the local congregation was a qualified tax exempt organization. Thus, we must conclude that the local congregation was not a qualified tax-exempt organization under section 501(c)(3).
Because petitioners have not substantiated the amounts of their claimed contributions nor shown that the contributions were made to a qualified tax-exempt organization, they have failed to meet their burden of proof on the issue of deductibility.
Petitioners have abused the process of this Court and wasted its resources and those of respondent. Therefore, we award damages to the United States under section 6673 in the amount of $5,000.
Decision will be entered for the respondent.
Footnotes
1. All section references are to the Internal Revenue Code of 1954, as amended and in effect during the years here in issue. ↩
2. Section 6653(a)(2), is effective for taxes the last date prescribed for payment of which is after December 31, 1981. This section provides:
There shall be added to the tax (in addition to the amount determined under paragraph (1)) an amount equal to 50 percent of the interest payable under section 6601--
(A) with respect to the portion of the underpayment described in paragraph (1) which is attributable to the negligence or intentional disregard referred to in paragraph (1), and
(B) for the period beginning on the last date prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax (or, if earlier, the date of the payment of the tax).
Because neither assessment nor payment of the tax has occurred in this case, the period described in section 6653(a)(2)(B) has not yet closed, and therefore, the amount of the addition to tax under section 6653(a)(2) for 1981 cannot be determined at this time.↩
3. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
4. Petitioners submitted receipts from the local congregation signed by Mrs. Layden in an attempt to substantiate their contributions. However, Mrs. Layden was not called as a witness and the receipts were not admitted into evidence under the rule against hearsay. Davis v. Commissioner,81 T.C. 806">81 T.C. 806↩ (1983), appeal filed (9th Cir. June 25, 1984).
5. On September 4, 1984, the Internal Revenue Service revoked its prior determination that the Universal Life Church, Inc. was a qualified organization under section 170(c)(2). Announcement 84-90, 36 I.R.B. 32">1984-36 I.R.B. 32↩.
6. Section 6653(a)(2) is applicable only to the underpayment for 1981. See note 2, supra.↩