Wednesday, March 23, 2022
Today is Day 3 of Judge Ketanji Brown Jackson's confirmation hearings for the Supreme Court and, since I'm blogging this week, I thought it might be worth seeing if she had ruled any cases dealing with tax exemption during her time as a district court judge. With nearly 600 opinions, it seemed at least plausible.
And it turns out she has at least one.[fn1]
In 2009, Z Street was incorporated as a Pennsylvania nonprofit. Its original purpose was to " educat[e] the public about Zionism; about the facts relating to the Middle East and to the existence of Israel as a Jewish State; and about Israel's right to refuse to negotiate with, make concessions to, or appease terrorists.” But when Z Street applied for federal tax exemption the following year, it was informed that the IRS carefully scrutinized 501(c)(3) applications related to Israel to make sure their activities didn't contradict Administration policies.
Z Street sued the IRS claiming that this special scrutiny constituted constitutionally-prohibited viewpoint discrimination. The IRS moved to dismiss based on the Anti-Injunction Act (which prohibits taxpayers from filing suits that would interfere with the collection of taxes), the Declaratory Judgments Act (which allows declaratory judgments except in the case of taxes), and sovereign immunity.
I'm not going to summarize all of the facts here, though I do recommend reading Judge Jackson's opinion here (or, if you'd prefer, Law360's summary of the opinion here). Ultimately, though, she denied the government's motion to dismiss. She read the AIA's prohibition on suits for the collection of revenue narrowly; here, she said, the suit wasn't a tax claim "couched  in constitutional terms." Rather, it was a constitutional claim that didn't implicate the collection of taxes. Likewise, the DJA didn't prevent the suit. (As for sovereign immunity, she held that the APA waived sovereign immunity for claims like Z Street's.)
[fn1] She may have more, but this is a busy week for me and I don't have time to do an exhaustive review of her opinions.
Samuel D. Brunson