Nonbelief Relief, Inc. v. Rettig
| Decision Date | 10 January 2020 |
| Docket Number | Civil Action No. 18-2347 (TJK) |
| Parties | NONBELIEF RELIEF, INC., Plaintiff, v. CHARLES RETTIG, Defendant, and NEW MACEDONIA BAPTIST CHURCH, Defendant-Intervenor. |
| Court | U.S. District Court — District of Columbia |
NonBelief Relief describes itself as an organization dedicated to alleviating human suffering, focusing on individuals targeted for their nonbelief, secular activism, or blasphemy. It was initially incorporated as a tax-exempt 501(c)(3) organization. All such organizations must file a detailed financial report—known as a Form 990—unless the organization is exempt from doing so. Churches and religious institutions are exempt. To protest this allegedly preferential treatment for churches, Nonbelief Relief refused to file a Form 990 for three consecutive years and then had its tax-exempt status revoked. It now sues the Commissioner of the Internal Revenue Service, alleging that its status was revoked in violation of the First Amendment's Establishment Clause and the Fifth Amendment's Due Process Clause. The Commissioner moved to dismiss, as did Intervenor, The New Macedonia Baptist Church. In response, NonBelief Relief moved to amend its complaint. For the reasons explained below, the Court will grant the Commissioner's and The New Macedonia Baptist Church's motions to dismiss on jurisdictional grounds and deny NonBelief Relief's motion to amend because it would be futile.
NonBelief Relief, Inc. was founded as a nonprofit corporation in 2015. ECF No. 1 ("Compl.") ¶¶ 4, 14. Its mission is "to improve conditions in this world, including by seeking to help remediate conditions of human suffering and injustice on a global scale, whether the result of natural disasters, human actions or adherence to religious dogma." Id. ¶ 16. NonBelief Relief seeks, more specifically, to assist atheists and other nonreligious individuals. See id. ¶¶ 17-20. It donates thousands of dollars per year to other charitable organizations. Id. ¶ 22.
Upon incorporation, NonBelief Relief qualified as a tax-exempt nonprofit organization under 26 U.S.C. § 501(c)(3) of the Internal Revenue Code. Id. ¶¶ 4, 31. The Internal Revenue Service (IRS) imposes various administrative requirements on 501(c)(3) organizations, such as requiring them to file annual reports and certain other forms; these requirements differ somewhat for secular and religious organizations. See id. ¶¶ 27, 30; see also 26 C.F.R. § 6033 (). In exchange for complying with these administrative requirements, 501(c)(3) organizations are exempt from federal income tax, and donations to them are tax-deductible. Compl. ¶ 26; see also 26 U.S.C. §§ 170, 501(a).
During the first three years after its incorporation, NonBelief Relief complied with all 501(c)(3) administrative requirements save one: submission of Form 990, a detailed annual report of its finances. Compl. ¶¶ 14, 27-28; see also 26 U.S.C. § 6033(a)(1). It refused to file a Form 990 because churches and religious institutions are not also required to submit one, see 26U.S.C. § 6033(a)(3).1 Compl. ¶¶ 39-40. Organizations that must submit a Form 990 have to do so each year, although the IRS gives noncompliant organizations a grace period; their tax-exempt status is revoked only after they fail to file it for three consecutive years. 26 U.S.C. § 6033(j)(1). Accordingly, after NonBelief Relief failed to file Form 990 for the three consecutive years, its tax-exempt status was automatically revoked in 2018. Compl. ¶¶ 6, 31; 26 U.S.C. § 6033(j).
Later that year, NonBelief Relief brought this suit, alleging that (1) the IRS's exemption for churches and religious organizations from the requirement to file Form 990 (the "church exemption") and (2) the IRS's revocation of NonBelief Relief's tax-exempt status each violated the First Amendment's Establishment Clause. Compl. ¶¶ 61, 63. It also asserted that the IRS's revocation of its tax-exempt status violated the equal protection component of the Fifth Amendment's Due Process Clause. Id. ¶ 63. Its prayer for relief requested declarations that both the church exemption and the revocation of its tax-exempt status were unconstitutional, an injunction barring the IRS from continuing to exempt churches and religious organizations from filing Form 990, and a court order reinstating its tax-exempt status. Id. at 12-13.
Shortly after NonBelief Relief filed suit, The New Macedonia Baptist Church moved to intervene. ECF No. 5. The Court granted that motion, reasoning that The New Macedonia Baptist Church's interests might diverge from the Commissioner's because of its intention "to argue not simply that the IRS's reporting exception is lawful, but that it is constitutionally required under the First Amendment," and because its motion otherwise satisfied the requirements for intervention as of right. ECF No. 30 at 4-5.
The Commissioner moved to dismiss NonBelief Relief's complaint on several grounds: that (1) the Anti-Injunction Act and Declaratory Judgment Act bar the declaration sought regarding NonBelief Relief's own tax-exempt status and reinstatement of that status; (2) sovereign immunity bars the injunctive and declaratory relief sought; and (3) NonBelief Relief lacks standing to bring its constitutional challenge to the church exemption. ECF No. 19. In response, NonBelief Relief moved to amend its complaint. The proposed amended complaint strikes its previous requests for an order reinstating its tax-exempt status and a declaration that the revocation of its tax-exempt status was unconstitutional, seemingly in response to the Commissioner's arguments concerning the Anti-Injunction Act and Declaratory Judgment Act, but is otherwise identical in substance to the operative complaint. See ECF No. 25.2
The New Macedonia Baptist Church filed its own motion to dismiss, arguing that the Court lacks jurisdiction over NonBelief Relief's claims, NonBelief Relief lacks standing to bring them, and the IRS's actions were not only consistent with the Establishment Clause but required by the Free Exercise Clause. See ECF No. 31. The parties completed briefing on all these motions, including an unopposed surreply by the Commissioner to NonBelief Relief's motion to amend. See ECF Nos. 27, 29, 32, 33, 35.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). "Within constitutional bounds, Congress decides what cases the federal courts have jurisdiction to consider." Bowles v. Russell, 551 U.S. 205, 212 (2007). Courts lack subject-matter jurisdiction over cases which fall within the scope of the Anti-Injunction Act. Maze v. Internal Revenue Serv., 862 F.3d 1087, 1091 (D.C. Cir. 2017). In addition, under Article III of the Constitution, an indispensable element of the Court's subject-matter jurisdiction is the plaintiff's standing to bring its claims. See Swigert v. Perez, 334 F. Supp. 3d 36, 40 (D.D.C. 2018). Challenges to a plaintiff's standing are thus properly brought as motions to dismiss under Federal Rule of Civil Procedure 12(b)(1). Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987). "To survive a motion to dismiss for lack of standing, a complaint must state a plausible claim that the plaintiff has suffered an injury in fact fairly traceable to the actions of the defendant that is likely to be redressed by a favorable decision on the merits." Humane Soc'y v. Vilsack, 797 F.3d 4, 8 (D.C. Cir. 2015). In considering the motions to dismiss, the Court will "accept the well-pleaded factual allegations as true and draw all reasonable inferences from those allegations in the plaintiff's favor." Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015).
Under Federal Rule of Civil Procedure 15(a)(2), a party may amend its complaint with leave of court. The Court should grant that leave "freely . . . when justice so requires." Fed. R. Civ. P. 15(a)(2). But the Court need not grant the motion when the proposed amended complaint would not survive a motion to dismiss. Hettinga v. United States, 677 F.3d 471, 480 (D.C. Cir. 2012).
NonBelief Relief seeks two types of relief in the operative complaint: first, a declaration that the IRS unconstitutionally revoked its tax-exempt status in violation of the First Amendment's Establishment Clause and the Fifth Amendment's Due Process Clause and an injunction reinstating its status; and second, a declaration that the church exemption violates theEstablishment Clause and an injunction striking it down for that reason.3 But as explained below, its first set of claims are barred by the Anti-Injunction Act and the Declaratory Judgment Act, and it lacks standing to seek the prospective relief in its second set of claims.
Congress has sharply limited the circumstances in which a taxpayer may bring a pre-collection suit challenging her tax liabilities. The Anti-Injunction Act, 26 U.S.C. § 7421(a), prohibits any court, subject to certain exceptions, from entertaining a suit "for the purpose of restraining the assessment or collection of any tax." "The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund." Cohen v. United States, 650 F.3d 717, 724 (D.C. Cir. 2011) (quoting Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7 (1962)). The Supreme Court has interpreted this prohibition broadly to include, as relevant here, suits seeking conferral or retention of tax-exempt status, because a judicial grant of tax exemption may ultimately affect revenue collected by the government. See, e.g., Alexander v. Ams. United, Inc., 416 U.S. 752, 759-62 (1974); Bob Jones Univ. v. Simon, 416 U.S. 725, 736-40...
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