Nationalist Movement v. Comm'r of Internal Revenue

• Decision Date: 11 April 1994
• Docket Number: No. 10540–91X.,10540–91X.
• Citation: 102 T.C. No. 22,102 T.C. 558
• Parties: The NATIONALIST MOVEMENT, a Mississippi Non–Profit Corporation, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
• Court: U.S. Tax Court

102 T.C. 558

102 T.C. No. 22

The NATIONALIST MOVEMENT, a Mississippi Non–Profit Corporation, Petitioner,

v.COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 10540–91X.

United States Tax Court.

April 11, 1994.

Richard Barrett, for petitioner.

Vivian A. Moore and Joan R. Domike, 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, 1986–2 C.B. 729, 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.

OPINION

HAMBLEN, Chief Judge:

Respondent determined that petitioner, The Nationalist Movement (sometimes abbreviated as TNM), does not qualify for exemption from Federal income taxation under section 501(c)(3).¹ Petitioner has challenged respondent's determination by invoking the jurisdiction of this Court for a declaratory judgment pursuant to 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. See sec. 7428(b).

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 of section 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) Whether Rev.Proc. 86–43, 1986–2 C.B. 729, is unconstitutionally vague or overbroad on its face, or otherwise unconstitutional as applied, in contravention of the 1st, 5th, and 14th 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 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. * * * The charter showed the domicile of the organization as “c/o Richard Barrett”, followed by a Mississippi address.

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 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 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's pro-majority philosophy is intended to counteract minority “tyranny”, which supposedly takes the form of special favors and privileges for minority groups, such as hiring quotas and affirmative action. For most of its existence, petitioner has strongly advocated repeal of the Civil Rights Act and the Voting Rights Act.²

Petitioner's view of the appropriate Government in the United States is a majority rule, winner-take-all democracy. In this regard, petitioner favors voting in at least some elections and on certain policy matters, such as busing and immigration, by means of nationwide initiatives and referenda. To petitioner, foreigners and domestic minorities are generally considered “unassimilable” and “incompatible”, and petitioner favors voluntary emigration or repatriation for these people.

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 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 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...