Christian Coal. of Florida, Inc. v. United States

• Citation: 2011 USTC P 50720,23 Fla. L. Weekly Fed. C 555,108 A.F.T.R.2d 2011,662 F.3d 1182
• Decision Date: 15 November 2011
• Docket Number: No. 10–14630.,10–14630.
• Parties: CHRISTIAN COALITION OF FLORIDA, INC., Plaintiff–Appellant, v. UNITED STATES of America, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

108 A.F.T.R.2d 2011-7157

2011-2 USTC P 50,720

23 Fla. L. Weekly Fed. C 555

662 F.3d 1182

CHRISTIAN COALITION OF FLORIDA, INC., Plaintiff–Appellant,

v.UNITED STATES of America, Defendant–Appellee.

No. 10–14630.

United States Court of Appeals, Eleventh Circuit.

Nov. 15, 2011.

James Bopp, Jr., Anita Yvonne Woudenberg, Bopp, Coleson & Bostrom, Terre Haute, IN, Horatio G. Mihet, Liberty Counsel, Orlando, FL, Mathew Duane Staver, Liberty Counsel, Maitland, FL, for Plaintiff–Appellant.

Patrick J. Urda, U.S. Dept. of Justice, Tax Div., Kenneth L. Greene, U.S. Dept. of Justice, Tax. Div., App. Section, Washington, DC, Robert E. O'Neill, David Paul Rhodes, Tampa, FL, for Defendant–Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before MARCUS, WILSON and COX, Circuit Judges.

MARCUS, Circuit Judge:

Christian Coalition of Fla. (“CC–FL”) appeals the district court's dismissal of its tax refund suit for mootness. Shortly after the litigation began, the Internal Revenue Service (“IRS”) refunded the disputed taxes in full. CC–FL claims, however, that a live controversy still exists because it is also seeking declaratory and injunctive relief in order to obtain a favorable determination of its tax-exempt status. CC–FL claims that the failure of the IRS to recognize CC–FL as a tax-exempt organization has collateral consequences that prevent the tax refund from rendering this case moot.

After thorough review, we AFFIRM the judgment of the district court. Filing a claim for a tax refund suit is not simply a procedural hurdle that, once leapt over, allows a party to seek other forward-looking relief against the IRS after the refund has been granted. Without a live refund claim, there is no way to distinguish this case from the kind of pre-enforcement suits that Congress, through the Anti–Injunction Act and the federal tax exemption to the Declaratory Judgment Act, has expressly forbidden taxpayers from bringing.

I.

CC–FL is a Florida non-profit corporation, founded in 1990. According to its complaint, CC–FL is an “advocacy organization” that “teaches concern for the sanctity of life, traditional family values, an economic system which fosters individual self-reliance, and faith in God.” CC–FL engages in a substantial amount of lobbying and “regularly publishes voter guides and legislative scorecards.”

Because of its lobbying activity, CC–FL could not seek tax exemption as a public charity under 26 U.S.C. § 501(c)(3). Instead, on July 19, 1993, CC–FL applied to the IRS for recognition of tax exempt status as a social welfare organization under 26 U.S.C. § 501(c)(4) and 26 C.F.R. § 1.501(a)–1.¹ Section 501(c)(4) (together with section 501(a)) exempts from taxation non-profit organizations “operated exclusively for the promotion of social welfare.” Unlike public charities, social welfare organizations may engage in lobbying and other forms of advocacy. They are not permitted, however, to engage in “direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.” 26 C.F.R. § 1.501(c)(4)–1(a)(2)(ii).

On July 25, 2000, the IRS issued a proposed determination letter denying CC–FL's application. On October 5, 2000, CC–FL filed a letter with the IRS protesting and appealing the proposed determination. Although the IRS and CC–FL held a conference on May 30, 2002 to discuss the proposed determination letter, the matter was put on hold while the IRS and The Christian Coalition International, an affiliated but separate legal entity, resolved a similar dispute in litigation then pending in the United States District Court for the Eastern District of Virginia.

After that litigation concluded, the IRS issued, via a letter dated July 31, 2008, its final determination that CC–FL did not qualify for tax exempt status under section 501(c)(4). The IRS stated: “We made this determination for the following reasons: You were not primarily engaged in activities that promote social welfare. Your activities primarily constituted direct and indirect participation in political campaigns on behalf of, or in opposition to, candidates for public office.” The final determination letter also incorporated in full the earlier proposed determination letter, which discussed at greater length what the IRS viewed as CC–FL's political activities, including publishing voter guides, releasing legislative scorecards right before elections, and conducting grassroots political activism seminars. The proposed determination letter concluded: “The emphasis throughout your materials is on electing to office ‘family friendly’ people in order to impact legislation and policy as insiders. The overwhelming majority of the evidence in the administrative record, and thus the facts and circumstances in this case, denotes an organization that is intent upon intervening in political campaigns.”

During the lengthy pendency of its application, CC–FL had filed non-profit information returns, not corporate tax returns, with the IRS. In light of the adverse determination, the IRS instructed CC–FL to file corporate tax returns for all of the tax years in question within 30 days of the final determination letter. CC–FL did so, filing tax returns and making full payments for tax years 1991, 1994–2000, and 2005–2006 on August 27, 2008. CC–FL's tax liability for these years was quite small, ranging from $16 (in 1994) to $48 (in 1997).²

On September 25, 2008, CC–FL then filed amended tax returns requesting a full refund for these tax years on the ground that it is a tax exempt social welfare organization under section 501(c)(4). By statute, a taxpayer must wait six months before bringing a tax refund suit. 26 U.S.C. § 6532(a)(1). Within this statutory window, on December 1, 2008, the IRS refunded CC–FL its tax amounts, plus statutory interest, for tax years 2005 and 2006, totaling $68.68. The IRS did not state its reasons for granting the refund.

The IRS did not issue a refund or make a determination within the six month statutory period as to CC–FL's claim for the remaining tax years 1991 and 1994–2000. Accordingly, on April 3, 2009, CC–FL filed the refund suit at issue in the United States District Court for the Middle District of Florida, seeking a full refund of $261 for those years. CC–FL also sought a declaration that it qualifies as a tax exempt organization under section 501(c)(4), an injunction prohibiting the IRS from revoking CC–FL's tax exempt status, and a declaration that 26 U.S.C. § 501(c)(4) and the accompanying regulations 26 C.F.R. §§ 1.504(c)(3)–1 and 1.504(c)(4)–1 are unconstitutional, both facially and as-applied to CC–FL, for overbreadth and vagueness.

Shortly after the litigation was filed, the IRS began refunding CC–FL its claimed tax amounts.³ The IRS determined that, under 26 U.S.C. §§ 6501(a) and 6501(g)(2),⁴ the three year statute of limitations on assessing and collecting taxes had run for all of the tax years. Accordingly, the IRS treated CC–FL's tax payments for those years as overpayments under 26 U.S.C. § 6401(a).⁵ Pursuant to 26 U.S.C. § 6402(a),⁶ the IRS first credited CC–FL's payments towards an existing employment tax liability for 2006, and then refunded the rest, sending the final refund check to CC–FL on August 11, 2009.

On August 17, 2009, the IRS moved to dismiss the refund suit for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). The IRS claimed that the refund suit was rendered moot because the refunds sought by CC–FL had been granted in full. The district court agreed, entering an order granting the government's motion and dismissing the complaint with prejudice on August 3, 2010, and entering a separate judgment the following day.

II.

“A district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) is a question of law we review de novo.” Sinaltrainal v. Coca–Cola Co., 578 F.3d 1252, 1260 (11th Cir.2009). Similarly, “[w]hether a case is moot is a question of law that we review de novo.” Sheely v. MRI Radiology Network, P.A., 505 F.3d 1173, 1182 (11th Cir.2007).

A.

We begin with a brief discussion of the relevant jurisdictional statutes. The United States, as a sovereign entity, is immune from suit unless it consents to be sued. United States v. Dalm, 494 U.S. 596, 608, 110 S.Ct. 1361, 108 L.Ed.2d 548 (1990); United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976); United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). “[T]he terms of its consent to be sued in any court,” as expressed by statute, “define that court's jurisdiction to entertain the suit.” Sherwood, 312 U.S. at 586, 61 S.Ct. 767. Accordingly, the terms of the statute or statutes waiving immunity are construed strictly, and courts may only entertain suits that are in full accord with such statutes. See Soriano v. United States, 352 U.S. 270, 276, 77 S.Ct. 269, 1 L.Ed.2d 306 (1957) (“[L]imitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied.” (citing Sherwood, 312 U.S. at 590–91, 61 S.Ct. 767)); accord McMaster v. United States, 177 F.3d 936, 939 (11th Cir.1999).

The primary jurisdictional statute governing judicial review of federal tax decisions is 28 U.S.C. § 1346(a). It provides, in relevant part:

The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of: (1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws[.]

28 U.S.C. § 1346(a). Title 26 U.S.C. § 7422, which governs civil actions for tax refunds, requires a...