High Adventure Ministries, Inc. v. Comm'r of Internal Revenue

Decision Date25 January 1983
Docket NumberDocket No. 4585-82X.
Citation80 T.C. 292
PartiesHIGH ADVENTURE MINISTRIES, INC., PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
CourtU.S. Tax Court

OPINION TEXT STARTS HERE

Petitioner is a church which respondent has previously found to be exempt from taxation. In 1980, respondent sought to reexamine petitioner's exempt status. Respondent requested certain information from petitioner, warning that failure to provide such information might result in the revocation of petitioner's exemption. Petitioner refused to provide the information and in several letters requested that respondent cease his examination. Respondent neither ceased his examination nor issued a notice of proposed revocation of exemption. On Mar. 1, 1982, petitioner filed a petition in this Court invoking our declaratory judgment jurisdiction under sec. 7428, I.R.C. 1954, seeking a declaration that petitioner is still exempt and an injunction to prohibit respondent's investigating petitioner in future without this Court's permission. Held, this Court lacks jurisdiction to hear this case under sec. 7428, I.R.C. 1954, because there is not as yet a sufficiently immediate and real adverse controversy regarding petitioner's exempt status and because petitioner's letters to respondent did not constitute requests for a redetermination of petitioner's exempt status. Ronald J. Maciel, for the petitioner.

Bernard Oster, for the respondent.

OPINION

NIMS , Judge:

Petitioner brought an action for a declaratory judgment pursuant to section 74281 and Rule 211 on the ground that respondent failed to make a determination with respect to petitioner's continuing qualification as an organization exempt from taxation under section 501(a) and described in sections 501(c)(3) and 170(b)(1)(A). This case is before us on respondent's motion to dismiss for lack of jurisdiction on the ground that petitioner did not request a redetermination of its qualification as an exempt organization or, alternatively, that petitioner has not exhausted its administrative remedies.

Based on the undisputed allegations of the petition and copies of four letters introduced by the petitioner,2 the pertinent facts for the purposes of this motion are as follows.

Petitioner is a California nonprofit corporation whose principal place of business was at Northridge, Calif., at the time the petition was filed.

On April 16, 1973, respondent issued a determination letter approving petitioner's application to receive recognition of its exempt status as a church described in section 170(b)(1)(A)(i).

As one of its activities, petitioner operates a missionary radio station in “Free Lebanon” whose broadcast facilities are occasionally used by Major Saad Haddad, “President of Free Lebanon.” Under the Carter Administration, the U.S. State Department unsuccessfully attempted to persuade petitioner to shut down these broadcast facilities. In a July 10, 1980, article by columnist Jack Anderson, the following sentence appeared: “At least one concerned member of Congress has requested an IRS investigation of High Adventure Ministries to determine if it is violating its religious tax exempt status by engaging in political activities.”

On or about July 28, 1980, the Los Angeles district of the Internal Revenue Service notified petitioner that it was to be investigated.

On October 8, 1980, the District Director for the Los Angeles key district wrote to petitioner asking it to respond to certain questions. On October 22, 1980, petitioner's attorney wrote to the District Director objecting to the series of question, indicating that petitioner considered the questions to constitute an examination of it in violation of the Constitution and the procedural statutory safeguards afforded churches under section 7605(c). The questions were not answered.

On December 5, 1980, the District Director again wrote the petitioner, assuring the petitioner that the Internal Revenue Service was only attempting to obtain information necessary to administer the provisions of the Internal Revenue Code which provide for exemption from Federal income tax. The District Director repeated his request that petitioner answer the questions and stated:

If you fail to respond to this second written request for the necessary information, you will have failed to support your claim that your organization is described in Section 501(c)(3) of the Internal Revenue Code. Accordingly, we may conclude that your organization is not of the kind described in Code section 501(c)(3), and we may withdraw our formal recognition of your exemption. We would therefore appreciate your cooperation in this matter.

By a letter dated March 27, 1981, the acting Regional Commissioner for the Western Region notified the petitioner that he had authorized the Los Angeles district to examine petitioner's books and religious activities under the provisions of sections 7602 and 7605(c). On April 19, 1981, petitioner's attorney wrote a letter to the Commissioner of Internal Revenue in Washington, D.C., requesting a ruling “that such authorization was improperly granted and that said authorization be withdrawn.” This letter then went on to describe petitioner's operation of its radio station in “Free Lebanon” and the station's possible use by Major Saad Haddad. Petitioner's attorney argued that the alleged use of the radio station was not political action on behalf of a “candidate for public office” as that term is used in section 501(c)(3). The letter further went on to accuse the Internal Revenue Service of conducting a politically motivated audit of petitioner in order to destroy petitioner. Petitioner's attorney argued that under section 7605(c), an audit of a church may only be conducted where reasonable cause to believe the church is engaging in prohibited activity exists and that no such reasonable cause existed in the case of petitioner.

In the closing paragraphs of this letter, petitioner's attorney wrote:

Another area which bears passing comment is that of the revocation by the Internal Revenue Service of Ministries exempt status. Since Ministries is an organization described in §170(b)(1)(A)(i)—-a church—-it need not have applied for recognition of its exempt status [§508(c)]. Congress clearly granted the recognition of that status without the necessity of seeking I.R.S. approval. The fact that Ministries did apply for and receive such recognition does not in any way constitute a waiver of any statutorily or constitutionally granted rights.

Ministries is now, and at all relevant times has been, operating consonant with its status under §501(c)(3) and §170(b)(1)(A)(i). Since Major Saad Haddad is not in fact a candidate for public office within the meaning of that term as used in the Internal Revenue Code, no prohibited conduct would result from his unfettered substantial use of the broadcast facilities. In actuality, the use is de minimis and proof thereof is already in the possession of U.S. government agencies. The audit in this case was conceived by and is being continued in, an impermissible politically motivated manner. No reasonable cause exists for commencing or continuing an audit of Ministries.

Accordingly, it is respectfully requested that the letter from the Acting Regional Commissioner dated March 27, 1981 to Ministries be withdrawn and the authorization to examine Ministries be denied.

On September 25, 1981, petitioner's attorney wrote a letter to the Examination Branch of the Exempt Organizations Division of the Office of the Assistant Commissioner (Employee Plans and Exempt Organizations) in Washington, D.C. This letter, in its entirety, stated:

I have received your letter dated August 6, 1981, in response to a request for a ruling previously made. In your letter it was stated that the action taken by the Western Region in relation to my client was proper. The letter did not indicate that in fact a ruling on the original request dated April 19, 1981, was made. If it was so intended, the original request also asked for a hearing thereon, but no such hearing has been profferred [sic]. Because there appears to be some misunderstanding in this situation, I would like to restate the request so that a definite stated decision on this matter can be made.

On the information presented to you:

1. Does the phrase “candidate for public office” have the same meaning in § 501(c)(3) as it does in §41?

2. Does full scale involvement on behalf of a candidate for a foreign political office constitute intervention or participation in a “political campaign on behalf of any candidate for public office” as that phrase is used in §501(c)(3)?

3. Can a §170(b)(1)(A)(i) organization be subjected to audit when the only reason therefor is political pressure(s)?

4. If the answer to #3 is yes, how is the situation at all different from the abuses manifested in the Watergate scandal?

5. Can an audit of a §170(b)(1)(A)(i) organization be authorized under § 7605(c) without there being objective reasonable cause to believe that the organization has violated the status originally granted to it?

6. What legitimate audit purpose is served by the Service's request for the names and addresses of contributors?

7. Can the I.R.S. audit an organization and request information that either the I.R.S. or some other government agency already has in its possession?

8. Can an audit of a §170(b)(1)(A)(i) organization be authorized under § 7605(c) when Federal agencies already possess information which would negate any reasonable cause for such audit?

I trust that this sufficiently delineates the request so that a ruling thereon would be forthcoming. If it is contemplated that an adverse ruling is to be issued, it is requested that a hearing thereon be held.

On December 16, 1981, an Internal Revenue agent, exempt organization specialist, working in the Los Angeles District Director's office responded to petitioner's letter of September 25, 1981, in the following letter:

Your letter...

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3 cases
  • EFCO Tool Co. v. Comm'r of Internal Revenue
    • United States
    • U.S. Tax Court
    • December 15, 1983
    ...of administrative remedies was evidenced by issuance of a final adverse determination letter. And, in High Adventure Ministries v. Commissioner, 80 T.C. 292, 298 (1983), on appeal (9th Cir., April 11, 1983), we stated that our jurisdiction in declaratory judgment actions is limited to insta......
  • High Adventure Ministries, Inc. v. C.I.R., 83-7245
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • February 22, 1984
    ... ... HIGH ADVENTURE MINISTRIES, INC., Petitioner-Appellant, ... COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee ... No. 83-7245 ... United States Court of Appeals, ... Ninth ... ...
  • Anclote Psychiatric Ctr., Inc. v. Comm'r of Internal Revenue
    • United States
    • U.S. Tax Court
    • March 31, 1992
    ...own independent review to determine whether the jurisdictional prerequisites of section 7428 have been met. High Adventure Ministries, Inc. v. Commissioner, 80 T.C. 292, 298 (1983), affd. 726 F.2d 555 (9th Cir. 1984). Because we conclude, as discussed infra, that respondent has “failed to m......
1 books & journal articles
  • Chapter 14 - § 14.4 • CONTESTING ADVERSE IRS DETERMINATIONS THROUGH DECLARATORY JUDGMENT ACTIONS
    • United States
    • Colorado Bar Association Guide for Colorado Nonprofit Organizations (CBA) Chapter 14 Adverse Determinations Regarding Code Section 501(C)(3) Status — Administrative Appeals and Judicial Remedies
    • Invalid date
    ...a determination in accordance with the 270-day rule. Treas. Reg. § 601.201(a)(3); see, e.g., High Adventure Ministries, Inc. v. Comm'r, 80 T.C. 292 (1983) (the Tax Court found no actual controversy existed because the IRS had not yet issued a notice of proposed revocation of exempt status).......

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