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What Will Be the Outcome of Catholic Answers vs. IRS? (4392)

Organization says its First Amendment rights were violated due to government 'improperly taxing its constitutionally protected political speech.' But lawsuit's success is 'highly unlikely,' according to a law professor.

10/25/2011 Comments (2)
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– Catholic Answers Facebook

SAN DIEGO (CNA)—The San Diego-based apologetics group Catholic Answers has asked the U.S. Supreme Court to allow it to sue the Internal Revenue Service for violating its First Amendment rights for “improperly taxing its constitutionally protected political speech.”

However, the lawsuit’s success is “highly unlikely,” said Lloyd Hitoshi Mayer, a University of Notre Dame Law School professor.

“Except under relatively rare circumstances, none of which exist here, successfully obtaining Supreme Court review is unlikely because the court denies most requests for review,” Mayer told CNA on Oct. 24. “It is even more unlikely in this case because both the trial court and the appellate court, without dissent, found that the case was moot.”

Even if the Supreme Court agreed to hear the case, he added, it would likely confirm the finding of the lower court and affirm the dismissal of the lawsuit without considering its constitutional claim.

In May 2008 the IRS ruled that two messages from Catholic Answers’ president, Karl Keating, illegally opposed the election of a specific candidate in the 2004 presidential election.

Keating’s two e-letters questioned whether Democratic candidate John Kerry, a Catholic, should present himself for holy Communion because of his support for abortion. The organization also created a voter’s guide which the IRS investigated before ruling that it did not violate tax-exemption rules.

The IRS ordered the organization to pay excise taxes for 2004 and 2005. However, the IRS in 2009 decided to lift the excise taxes and pay interest to Catholic Answers because the alleged political activity was “not willful and flagrant,” the California Catholic Daily reported.

Catholic Answers said that the complaint was initiated by Frances Kissling, who was then the head of the abortion-supporting group Catholics for Choice, which the U.S. bishops have said distorts Catholic teaching.

In its lawsuit, filed in 2009, Catholic Answers charged that the IRS’ process of punishment and appeal poses a threat to free speech.

James Bopp Jr. of the James Madison Center for Free Speech, Catholic Answers’ legal representative, said the organization asked for court review because “without a change in the IRS’ position on its speech, it couldn’t risk mak(ing) comments like those on the web post again to avoid another investigation and tax penalty.”

Both courts ruled that because Catholic Answers got its money back, the issue was resolved and the courts could do nothing further.

“This allows the IRS to harass and penalize nonprofits who discuss public officials who are also running for office, while leaving those nonprofits without any recourse: The IRS can simply return the money at the last minute and never be sued for taxing protected speech that shouldn’t be taxed in the first place,” Bopp said.

The IRS actions will deter nonprofits from speaking about individuals who are political candidates in any context for fear of an investigation, he added.

“Nothing prevents the IRS from doing this again. And these groups now have no judicial remedy,” he said.

Mayer said the lawsuit raises the important issue of whether the government’s rule is unconstitutionally vague.

“Catholic Answers is correct that the test is vulnerable to criticism, that it unconstitutionally chills speech by charities that are tax-exempt under Internal Revenue Code Section 501(c)(3) because it is difficult for them to know when the IRS will find that their speech violates this prohibition.”

It is “possible but not certain” the lawsuit’s constitutional claim would succeed if a court would consider it.

Catholic organizations, including the U.S. Conference of Catholic Bishops and Catholic dioceses, are exempt from federal income tax as 501(c)(3) organizations. They are eligible to receive tax-deductible contributions, but the tax code requires them not to support or oppose candidates for elected office.

“This prohibition applies to all organizations that claim these tax benefits, both religious and secular,” Mayer explained. “This prohibition prevents Catholic organizations from using tax-deductible contributions for speech or other actions supporting or opposing candidates.”

Catholic organizations may create an affiliated organization that is exempt under 501(c)(4) rules, though these organizations are ineligible for tax-deductible contributions. These organizations may support or oppose candidates, as long as doing so is not its primary activity.

Catholic Answers chose this path, he noted, by transferring responsibilities for its voter’s guide to its affiliate Catholic Answers Action.

Mayer explained: “This option is not available for some types of speech, however, most notably speaking about candidates from the pulpit during a regular worship service.”

Filed under catholic answers, court cases, irs, nonprofits, tax-exempt organizations