Basic Unit Ministry of Schurig v. C. I. R., 81-1247
| Decision Date | 15 January 1982 |
| Docket Number | No. 81-1247,81-1247 |
| Citation | 670 F.2d 1210 |
| Parties | , 82-1 USTC P 9141 The BASIC UNIT MINISTRY OF ALMA KARL SCHURIG, Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Appellee. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Alma Karl Schurig, pro se, was on the brief for appellant.
John F. Murray, Acting Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., Michael L. Paup, Ann Belanger Durney and Murray S. Horwitz, Attys., Dept. of Justice, Washington, D. C., were on the brief for appellee.
Before McGOWAN, Senior Circuit Judge, MacKINNON and GINSBURG, Circuit Judges.
Opinion PER CURIAM.
Appellant, The Basic Unit Ministry of Alma Karl Schurig, seeks a declaratory ruling that it is a tax-exempt religious organization under 26 U.S.C. § 501(c) (3) (1976). 1 We conclude, substantially for the reasons stated by the District Court in its Memorandum, The Basic Unit Ministry of Alma Karl Schurig v. United States of America, No. 79-3307 (D.D.C. January 31, 1981), that taxpayer has not demonstrated that it qualifies as a tax-exempt religious organization. We note particularly that the United States does not now dispute that taxpayer was organized for religious purposes, and that the District Court did not address the question whether taxpayer is a church.
From our review of the record we conclude that taxpayer failed to establish, in submissions to the Internal Revenue Service (IRS) or to the District Court, one vital requirement of tax-exempt status, i.e., that "no part of the net earnings of (its organization) inures to the benefit of any private ... individual ..." 26 U.S.C. § 501(c)(3). Appearing through its Presiding Officer, taxpayer confuses a criminal prosecution, in which the government carries the burden of establishing the defendant's guilt, with a suit seeking a declaratory judgment that plaintiff is entitled to tax-exempt status, in which the taxpayer, whether a church or an enterprise of another character, bears the burden of establishing that it qualifies for exemption.
Nor is there any substance to taxpayers' contention that it is constitutionally entitled to the "no rule" remedy it sought below. Although the nature of this remedy is unclear, taxpayer appears to have sought from the District Court an order directing the IRS to withdraw its adverse ruling and instead declare that it would not pass on the question of taxpayer's exempt status either favorably or unfavorably. Even supposing some precedent for such relief-and taxpayer provides us with none-and even if we were authorized to dictate procedural forms to the IRS or to grant relief that would have no impact whatever on taxpayer's obligation to file federal income tax returns, we would regard as frivolous taxpayer's current plea for a "no rule" determination. On March 24, 1978, the IRS issued a letter explaining that since taxpayer was unable to provide sufficient information on the operation of its organization, a determination as to its exempt status would not be made. By letters dated April 7 and 22, 1978, taxpayer protested the refusal of the IRS to rule it exempt. Under the circumstances, having invited a ruling, taxpayer is in no position to complain that the IRS answered its protest by denying its claim.
On consideration of the foregoing, and for the reasons set forth in the District Court's opinion which we include as an Appendix hereto, the judgment of the District Court on appeal herein is hereby affirmed.
Judgment accordingly.
Plaintiff, a nonprofit Utah corporation, seeks a ruling regarding its qualification as a tax-exempt religious organization under 26 U.S.C. § 501(c) (3) (1976). Defendants are the United States and the Commissioner of the Internal Revenue Service. Jurisdiction is premised upon 28 U.S.C. § 1346(e) (1976). Under 26 U.S.C. § 7428, the remedy of a declaratory judgment is available to taxpayers seeking a tax exempt classification. Presently before the Court are cross motions for summary judgment and defendants' motion to dismiss the Commissioner as an improper party.
As an initial matter, the motion to dismiss the Commissioner is granted. The jurisdictional provision enabling this action, 28 U.S.C. § 1346(e), provides only for suits against the United States, not against its officers.
At issue in the summary judgment motions is the propriety of defendant's determination that plaintiff was not eligible for exemption. The record reveals that in October of 1977 plaintiff applied for an exemption from taxation. At the time it was comprised of six members. Two were the husband and wife founders (the Schurigs) and the remaining four were members of their family. Mr. Schurig is the Presiding Officer of the organization. Plaintiff now claims fifteen total members. Membership is subject to majority vote of the members and to the approval of the Presiding Officer, other than membership by birth or marriage. The stated purpose of the organization is to carry on religious and charitable work and to develop the physical, mental, social, emotional, and spiritual welfare of its members. Plaintiff claims that its members engage in extensive religious services and education, Sunday school activities, that they administer emotional, spiritual, and financial assistance to the needy, and carry on extensive missionary work. Plaintiff has stated that approximately thirty per cent of its income is spent on exempt purposes not including the maintenance of its members. This money is spent on purposes such as aid to underprivileged peoples, missionary support, welfare contributions, and chapel maintenance and construction. Plaintiff has offered no details on these disbursements.
Plaintiff also has a definite economic structure. Pursuant to its constitution, members must voluntarily renounce ownership of their personal property by deeding and assigning such property and their income to the organization. The Presiding Officer approves checkwriting privileges to draw on plaintiff's funds. Withdrawing members may reclaim their property only at the discretion of plaintiff. Members must serve in "stewardships" on behalf of plaintiff, which often consist of "apparently non-religious" services performed for third parties who pay the salaries of members directly to plaintiff without withholding taxes. Plaintiff in turn pays all the living expenses of the members. It appears that 70% of plaintiff's expenditures go to the support of its members.
Sections 501(a) and (c) of the Internal Revenue Code allow tax exemptions for organizations...
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