Nonbelief Relief, Inc. v. Kautter

Citation: Not availableDocket: Civil Action No. 2018-2347

Court: District Court, District of Columbia; January 9, 2020; Federal District Court

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NonBelief Relief, Inc. is a nonprofit organization focused on alleviating human suffering for individuals targeted due to their nonbelief or secular activism. Incorporated as a tax-exempt 501(c)(3) organization, it is required to file annual financial reports (Form 990) unless exempt, which applies to churches and religious institutions. NonBelief Relief protested this exemption by refusing to file Form 990 for three consecutive years, leading to the revocation of its tax-exempt status in 2018. The organization subsequently sued the IRS Commissioner, claiming violations of the First Amendment’s Establishment Clause and the Fifth Amendment’s Due Process Clause. The IRS Commissioner and The New Macedonia Baptist Church intervened, both moving to dismiss the case on jurisdictional grounds. NonBelief Relief sought to amend its complaint, but the court ultimately granted the motions to dismiss and denied the amendment as futile. NonBelief Relief was established in 2015 and aims to assist atheists and nonreligious individuals, donating significant amounts to other charities. The IRS imposes specific administrative requirements on 501(c)(3) organizations, and the automatic revocation of tax-exempt status occurs after failing to file Form 990 for three years. The organization contends that the church exemption and its revocation of status violate constitutional rights.

NonBelief Relief contended that the IRS's revocation of its tax-exempt status infringed on the Fifth Amendment's Due Process Clause, claiming a violation of equal protection. It sought declarations that both its tax exemption and the revocation were unconstitutional, an injunction against the IRS's exemption practices for churches, and reinstatement of its tax-exempt status. The New Macedonia Baptist Church intervened, arguing that it had a distinct interest in defending the IRS's reporting exception as constitutionally required under the First Amendment. The intervention was granted based on the church's divergent interests and satisfaction of intervention requirements. NonBelief Relief appeared to be formed partly to challenge the constitutionality of 26 U.S.C. § 6033(a)(3), following a failed related challenge due to lack of standing. 

The Commissioner moved to dismiss the complaint on several grounds, including that the Anti-Injunction Act and the Declaratory Judgment Act barred the requested declarations, sovereign immunity prevented the injunctive and declaratory relief, and NonBelief Relief lacked standing for its constitutional challenge. In response, NonBelief Relief moved to amend its complaint, removing requests for reinstatement and a declaration of unconstitutionality regarding its tax-exempt status, while keeping the substance of the complaint intact. The New Macedonia Baptist Church also filed a motion to dismiss, claiming lack of jurisdiction and standing for NonBelief Relief and asserting that the IRS’s actions were consistent with the Establishment Clause and required by the Free Exercise Clause.

All parties completed their motions' briefing, including an unopposed surreply from the Commissioner regarding the amendment. Legal standards emphasized that federal courts have limited jurisdiction defined by the Constitution and statutes, with the Anti-Injunction Act limiting jurisdiction over certain cases and standing being essential for subject-matter jurisdiction. A plaintiff must demonstrate a plausible claim of injury linked to the defendant's actions to survive a motion to dismiss for lack of standing.

In evaluating the motions to dismiss, the Court will accept the plaintiff's well-pleaded factual allegations as true and infer reasonable conclusions in their favor. Under Federal Rule of Civil Procedure 15(a)(2), amendments to complaints should be granted liberally when justice requires, but the Court may deny amendments that would not survive a motion to dismiss. NonBelief Relief seeks two types of relief: a declaration that the IRS wrongfully revoked its tax-exempt status under the First and Fifth Amendments, and a declaration that the church exemption violates the Establishment Clause.

However, the first set of claims is barred by the Anti-Injunction Act and the Declaratory Judgment Act, while the second set lacks standing. The Anti-Injunction Act restricts pre-collection suits against tax assessments, requiring that disputes over tax liabilities be settled in suits for refunds. The Supreme Court has broadly interpreted this prohibition to include cases involving tax-exempt status, as judicial decisions on tax exemptions can impact government revenue. The Declaratory Judgment Act similarly restricts courts from issuing declaratory judgments related to federal taxes, and both acts are understood to have overlapping applications.

The Court's jurisdiction is divested in cases where claims about tax-exempt status could inhibit the government's ability to collect taxes. For instance, in a precedent case, a nonprofit's claim regarding its tax-exempt status was barred under the Anti-Injunction Act because it aimed to facilitate tax-deductible donations. NonBelief Relief's claims mirror this situation, as it also argues that the revocation of its tax-exempt status harms its donors' ability to make tax-deductible contributions.

NonBelief Relief's request to reinstate its tax-exempt status is aimed at restraining tax collection under 26 U.S.C. 7421(a), and it has not effectively contested the Commissioner’s claim that its request is barred by the Anti-Injunction Act and the Declaratory Judgment Act. Instead, the organization moved to amend its complaint, indicating a withdrawal of these claims. NonBelief Relief’s attempt to seek an injunction and declaratory judgment regarding its tax-exempt status is invalid, as its status was automatically revoked under 26 U.S.C. 6033(j), rendering 26 U.S.C. 7428 inapplicable, and thus the Court lacks jurisdiction over its claims. 

Furthermore, NonBelief Relief challenges the church exemption under 26 U.S.C. 6033(a)(3), alleging violations of the Establishment Clause and Due Process Clause, and seeks to enjoin the Commissioner from exempting churches from filing Form 990. However, both the Commissioner and The New Macedonia Baptist Church argue that this request does not address NonBelief Relief’s alleged injury, questioning its standing. To establish standing, a plaintiff must show injury in fact, causation, and redressability, with the latter requiring that the requested relief likely alleviates the specific injury claimed. NonBelief Relief asserts it was injured by the filing requirement for 501(c)(3) organizations, while churches were exempt. However, this injury is not ongoing or imminent, as NonBelief Relief is no longer a tax-exempt entity and has not indicated plans to reapply for that status. Thus, it fails to demonstrate the necessary elements for standing.

NonBelief Relief lacks standing to seek declaratory and injunctive relief regarding the church exemption, as it is not currently suffering an injury from the Commissioner’s treatment of churches and religious organizations; it is treated the same as other non-501(c)(3) entities. The court found that NonBelief Relief's allegations of unequal treatment are not ongoing or imminent, as it faces no current or future obligation to file a Form 990, which churches are exempt from. Although NonBelief Relief's tax-exempt status is technically ongoing, it did not base its standing on this loss. The relief sought—declaring the church exemption unlawful and enjoining the Commissioner from enforcing it—would not remedy this status loss. Jurisdiction is further limited by the Anti-Injunction Act and the Declaratory Judgment Act. Consequently, all claims concerning the church exemption must be dismissed for lack of standing, leading to the denial of NonBelief Relief’s motion to amend its complaint as futile. The court affirmed that the church exemption is not immune from judicial review, noting alternative legal avenues for challenging tax-related issues. The Commissioner’s Motion to Dismiss, as well as the motion by The New Macedonia Baptist Church, will be granted, while NonBelief Relief’s motion to amend will be denied.