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Regan v. Taxation with Representation

Supreme Court of the United States

March 22, 1983, Argued ; May 23, 1983, Decided 1

No. 81-2338

Opinion

 [*541]  [***134]  [**1999]    JUSTICE REHNQUIST delivered the opinion of the Court.

Appellee Taxation With Representation of Washington (TWR) is a nonprofit corporation organized to promote what it conceives to be the "public interest" in the area of federal  [*542]  taxation. It proposes to advocate its point of view before Congress, the Executive Branch, and the Judiciary. This case began when TWR applied for tax-exempt status under § 501(c)(3) of the Internal Revenue Code, 26 U. S. C. § 501(c)(3). The Internal Revenue Service denied the application because it appeared that a substantial part of TWR's activities would consist of attempting to influence legislation, which is not permitted by § 501(c)(3). 3

 [****5]   TWR  [***135]  then brought this suit in District Court against the appellants, the Commissioner of Internal Revenue, the Secretary of the Treasury, and the United States, seeking a declaratory judgment that it qualifies for the exemption granted by § 501(c)(3).  It claimed the prohibition against substantial lobbying is unconstitutional under the First Amendment and the equal protection component of the Fifth Amendment's Due Process Clause. 4 [****6]  The District Court granted summary judgment for appellants.  On appeal, the en banc Court of Appeals for the District of Columbia Circuit reversed, holding that § 501(c)(3) does not violate the First Amendment but does violate the Fifth Amendment. 219 U. S. App. D. C. 117, 676 F.2d 715 (1982). Appellants appealed pursuant to 28 U. S. C. § 1252, and TWR cross-appealed.  [*543]  We noted probable jurisdiction of the appeal, 459 U.S. 819 (1982). 5

TWR was formed to take over the operations of two other nonprofit corporations.  [**2000]  One, Taxation With Representation Fund, was organized to promote TWR's goals by publishing a journal and engaging in litigation; it had tax-exempt status under § 501(c)(3). The other, Taxation With Representation, attempted to promote the same goals by influencing legislation; it had tax-exempt [****7]  status under § 501(c)(4). 6 Neither predecessor organization was required to pay federal income taxes. For purposes of our analysis, there are two principal differences between § 501(c)(3) organizations and § 501(c)(4) organizations. ] Taxpayers who contribute to § 501(c)(3) organizations, are permitted by § 170(c)(2) to deduct the amount of their contributions on their federal income tax returns, while contributions to § 501(c)(4) organizations are not deductible. Section 501(c)(4) organizations, but not § 501(c)(3) organizations, are permitted to engage in substantial lobbying to advance their exempt purposes.

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461 U.S. 540 *; 103 S. Ct. 1997 **; 76 L. Ed. 2d 129 ***; 1983 U.S. LEXIS 33 ****; 51 U.S.L.W. 4583; 83-1 U.S. Tax Cas. (CCH) P9365; 51 A.F.T.R.2d (RIA) 1294

REGAN, SECRETARY OF THE TREASURY, ET AL. v. TAXATION WITH REPRESENTATION OF WASHINGTON

Prior History:  [****1]  APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT.

Disposition:  219 U. S. App. D. C. 117, 676 F.2d 715, reversed.

CORE TERMS

lobbying, organizations, contributions, subsidize, First Amendment, veterans', deductions, tax-deductible, classification, charitable, exemption, subsidy, purposes, strict scrutiny, tax exemption, nonlobbying, tax-exempt, affiliate, Taxation, cases, funds, constitutional right, lobbying activities, cross-appeal, Taxpayers, benefits, qualify, rights

Tax Law, Federal Taxpayer Groups, Exempt Organizations, Charitable, Religious & Scientific Organizations, Conditions & Restrictions, Federal Income Tax Computation, Nonbusiness Expenses, General Overview, Charitable Contributions, Allowance of Deduction, Constitutional Law, Equal Protection, Judicial Review, Standards of Review, Governments, Legislation, Interpretation