United States Court of Appeals
for the Federal Circuit
__________________________
FOUNDATION OF HUMAN UNDERSTANDING,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
__________________________
2009-5129
__________________________
Appeal from the United States Court of Federal
Claims in 04-CV-1441, Chief Judge Emily C. Hewitt.
__________________________
Decided: August 16, 2010
___________________________
MARC K. SELLERS, Schwabe Williamson & Wyatt, PC,
of Portland, Oregon, argued for plaintiff-appellant. With
him on the brief was DAN ELLER.
KENNETH L. GREENE, Attorney, Appellate Section, Tax
Division, United States Department of Justice, of Wash-
ington, DC, argued for defendant-appellee. With him on
the brief were JOHN A. DICICCO, Acting Assistant Attorney
General, and ELLEN PAGE DELSOLE, Attorney.
__________________________
FOUNDATION OF HUMAN v. US 2
Before LOURIE, BRYSON, and GAJARSA, Circuit Judges.
BRYSON, Circuit Judge.
The Foundation of Human Understanding (“the
Foundation”), which describes itself as “based upon
Judeo-Christian beliefs and the doctrine and teachings of
its founder, Roy Masters,” challenges a decision of the
United States Court of Federal Claims that the Founda-
tion did not qualify as a “church” under section
170(b)(1)(A)(i) of the Internal Revenue Code (“I.R.C.”), 26
U.S.C. § 170(b)(1)(A)(i), for the period from January 1,
1998, through December 31, 2000. We affirm.
I
The Foundation is a nonprofit corporation that was
incorporated in 1963. The Internal Revenue Service
(“IRS”) first recognized the Foundation’s tax-exempt
status under I.R.C. § 501(c)(3) in 1965. In 1970, the
Foundation filed Form 4653, entitled “Notification Con-
cerning Foundation Status,” in which it represented to
the IRS that it was not a private foundation under I.R.C.
§ 509(a)(1) because it qualified as a church under I.R.C. §
170(b)(1)(A)(i). The IRS agreed that the Foundation was
not a private foundation, but only because the Foundation
qualified as a publicly supported organization under
I.R.C. § 170(b)(1)(A)(vi).
The Foundation subsequently renewed its request for
a ruling from the IRS that it qualified as a church under
section 170. The IRS denied that request in 1983. The
Foundation responded by filing an action before the
United States Tax Court in which it sought a declaratory
judgment that it qualified as a church. The Tax Court
ruled in favor of the Foundation, relying principally on
the following facts: (1) the Foundation owned a building
3 FOUNDATION OF HUMAN v. US
in Los Angeles, California, where it conducted services
“three or four times a week”; (2) the Foundation operated
Brighton Academy, “a school for children” that instructed
its students in the teachings of the Foundation; (3) the
Foundation purchased the Tall Timber Ranch in Selma,
Oregon, where it conducted seminars, meetings, and other
activities; (4) the Foundation purchased a church building
in Grants Pass, Oregon, and conducted services there;
and (5) the Foundation provided “regular religious ser-
vices for established congregations [consisting of 50 to 350
persons] that [were] served by an organized ministry.”
Foundation of Human Understanding v. Comm’r (Foun-
dation I), 88 T.C. 1341, 1347-49, 1359 (1987). The Tax
Court recognized that the Foundation devoted substantial
resources to disseminating its message through radio
broadcasts and printed pamphlets, activities that did not
support its claim to church status. The court held, how-
ever, that those broadcasting and publishing activities did
not “overshadow the other indications that petitioner is a
church.” Id. at 1360.
In the years following the Tax Court’s decision, the
Foundation underwent several changes. First, in 1991,
Brighton Academy was separately incorporated and
began to operate as a “private non-denominational Chris-
tian school” rather than a school based on the Founda-
tion’s doctrines. Next, during the mid-1990s, the
Foundation sold its buildings in Los Angeles and Grants
Pass, and, in the late 1990s, meetings at the Tall Timber
Ranch became less frequent. The Foundation, however,
continued to disseminate its messages through broadcast
and print media, and it began to use the Internet for the
same purpose.
In 2001, the IRS began a church-tax inquiry for the
period from January 1, 1998, through December 31, 2000.
At the conclusion of that inquiry, the IRS determined that
FOUNDATION OF HUMAN v. US 4
while the Foundation was entitled to retain its tax-
exempt status under section 501(c)(3), its church status
under section 170 would be revoked. 1 The Foundation
challenged that decision by filing the present action,
seeking a declaratory judgment in the United States
Court of Federal Claims pursuant to 26 U.S.C. § 7428.
Both parties moved for summary judgment. The court
granted judgment to the government in a thorough and
carefully reasoned opinion on which we substantially rely.
Foundation of Human Understanding v. United States
(Foundation II), 88 Fed. Cl. 203 (2009).
The trial court placed the burden of proof on the
Foundation to demonstrate its status as a church and
restricted the scope of evidence to the Foundation’s activi-
ties during the audit years of 1998 through 2000. The
court then identified the two main analytical approaches
that have been used to determine whether an institution
is a “church” under section 170: a set of 14 criteria devised
by the IRS, 2 and the so-called “associational test” adopted
1 The IRS made clear that, even without church
status under section 170, the Foundation qualified as a
“religious organization” under I.R.C. § 501(c)(3) and
therefore would not lose its tax-exempt status. A “reli-
gious organization” that does not enjoy “church” status is
required to file informational returns with the IRS under
I.R.C. § 6033, and the IRS has broader authority to inves-
tigate such an organization’s activities. See Spiritual
Outreach Soc’y v. Comm’r, 927 F.2d 335, 337 n.2 (8th Cir.
1991); Church of Spiritual Tech. v. United States, 26 Cl.
Ct. 713, 731 n.37 (1992) (“[C]hurches may be investigated
by the IRS only in accordance with strict and specific
procedures specified in I.R.C. § 7611.”).
2 The 14 criteria have their origin in a 1979 speech
by the IRS Commissioner, and the IRS has subsequently
applied those factors in its section 170 determinations.
See Foundation I, 88 T.C. at 1357. The 14 criteria are: (1)
a distinct legal existence; (2) a recognized creed and form
of worship; (3) a definite and distinct ecclesiastical gov-
5 FOUNDATION OF HUMAN v. US
by several courts. The court expressed concern about the
“14 criteria” approach on the ground that it “appears to
favor some forms of religious expression over others in a
manner in which, if not inconsistent with the letter of the
Constitution, the court finds troubling when considered in
light of the constitutional protections of the Establish-
ment and Free Exercise Clauses.” Foundation II, 88 Fed.
Cl. at 217. Nonetheless, the court looked to the 14 crite-
ria for guidance and found that the Foundation satisfied
some, but not all, of those criteria. For example, the court
found that the Foundation had not established that it had
a regular congregation or that it held regular services
during the years at issue.
Even though the trial court referred to the 14 criteria
in the course of its factual findings, it ultimately decided
the case by applying the associational test, which defines
a church as an organization that includes a body of be-
lievers who assemble regularly for communal worship.
Specifically, the court found that the Foundation did not
provide regular religious services to an established con-
gregation and concluded that “[t]he extent to which [the]
Foundation brings people together to worship is inciden-
tal to its main function” of spreading its message through
publication and broadcasting. Foundation II, 88 Fed. Cl.
ernment; (4) a formal code of doctrine and discipline; (5) a
distinct religious history; (6) a membership not associated
with any other church or denomination; (7) an organiza-
tion of ordained ministers; (8) ordained ministers selected
after completing prescribed studies; (9) a literature of its
own; (10) established places of worship; (11) regular
congregations; (12) regular religious services; (13) Sunday
schools for religious instruction of the young; and (14)
schools for the preparation of its ministers. The IRS also
considers “any other facts and circumstances which may
bear upon the organization's claim for church status.” Id.
at 1357-58.
FOUNDATION OF HUMAN v. US 6
at 234. Relying on case law that treats publishing activi-
ties as insufficient to confer church status and denies
church status to entities whose associational activities are
merely incidental to their publishing and broadcasting
activities, the trial court held that the Foundation did not
qualify as a church under section 170. The Foundation
appeals that decision.
II
Neither Congress nor the IRS has provided much
guidance as to the meaning of the term “church” in I.R.C.
§ 170 or what is required for an institution to qualify for
that designation. As the trial court observed, neither the
statute nor any IRS regulation defines that statutory
term. See Foundation II, 88 Fed. Cl. at 218; Am. Guid-
ance Found. v. United States, 490 F. Supp. 304, 306
(D.D.C. 1980) (Congress has offered “virtually no guid-
ance” as to what it meant by the term “church” in section
170.).
Nevertheless, some degree of consensus has emerged
from court decisions. First, those courts that have ad-
dressed the issue largely agree that “Congress intended a
more restricted definition for a ‘church’ than for a ‘reli-
gious organization.’” Church of the Visible Intelligence
that Governs the Universe v. United States, 4 Cl. Ct. 55,
64 (1983); see also Am. Guidance, 490 F. Supp. at 306;
Chapman v. Comm’r, 48 T.C. 358, 363 (1967) (“every
religious organization is not per se a church”). Thus, as in
this case, an entity that engages in religious teaching may
be a “religious organization” but still not qualify as a
“church” for purposes of section 170. Second, as several
courts have noted, “[t]he means by which an avowedly
religious purpose is accomplished [is what] separates a
‘church’ from other forms of religious enterprise.” Spiri-
tual Outreach Soc’y v. Comm’r, 927 F.2d 335, 339 (8th Cir.
7 FOUNDATION OF HUMAN v. US
1991); Am. Guidance, 490 F. Supp. at 306; First Church of
In Theo v. Comm’r, 56 T.C.M. (CCH) 1045 (1989); see also
United States v. Jeffries, 854 F.2d 254, 258 (7th Cir. 1988)
(an established congregation, regular religious services,
and dissemination of a doctrinal code “help distinguish a
church from some other form of religious enterprise”).
Third, the courts have relied mainly on the IRS’s 14
criteria and on the associational test when addressing the
distinction between a religious organization and a church
under section 170.
With respect to the 14 criteria, we share the concerns
expressed by the trial court and note that courts have
generally declined to accept the 14 criteria as a definitive
test for whether an institution qualifies as a church. See,
e.g., Foundation I, 88 T.C. at 1358; Spiritual Outreach,
927 F.2d at 339 (treating the 14 criteria as “a guide,
helpful in deciding what constitutes a church”). More-
over, even those cases that rely on the 14 criteria apply
them flexibly, recognizing that “the IRS does not give
controlling weight to any one [of the 14 criteria],” Visible
Intelligence, 4 Cl. Ct. at 64; see also Foundation I, 88 T.C.
at 1350 (“These criteria are not exclusive and are not
mechanically applied, but, rather, serve as a list of some
of the characteristics that may be used in determining
whether an organization is a church . . . .”).
Courts have been more receptive to the associational
test as a means of determining church status under
section 170. See, e.g., Church of Eternal Life & Liberty,
Inc. v. Comm’r, 86 T.C. 916, 924 (1986) (“To qualify as a
church an organization must serve an associational role
in accomplishing its religious purposes.”); Am. Guidance,
490 F. Supp. at 306 (“At a minimum, a church includes a
body of believers or communicants that assembles regu-
larly in order to worship.”); Visible Intelligence, 4 Cl. Ct.
at 65; VIA v. Comm’r, 68 T.C.M. (CCH) 212 (1994); Foun-
FOUNDATION OF HUMAN v. US 8
dation I, 88 T.C. at 1357; Church of Spiritual Tech. v.
United States, 26 Cl. Ct. 713, 730-31 n.36 (1992); Spiri-
tual Outreach Soc’y v. Comm’r., 58 T.C.M. (CCH) 1284
(1990), aff’d, 927 F.2d 335 (8th Cir. 1991) (“[A] church is a
cohesive group of individuals who join together to accom-
plish the religious purposes of mutually held beliefs.”);
Chapman v. Comm’r, 48 T.C. at 367 (Tannenwald, J.,
concurring) (“In my opinion, the word ‘church’ implies
that an otherwise qualified organization bring[s] people
together as the principal means of accomplishing its
purpose.”); see also Spiritual Outreach, 927 F.2d at 338
(noting the Tax Court’s holding that the organization
“failed to fulfill an associational requirement” but resolv-
ing the case without reaching “the associational require-
ment issue”).
We agree that the associational test is an appropriate
test for determining church status under section 170,
although we recognize that the associational test and the
“14 criteria test” substantially overlap; as courts have
pointed out, among the most important of the 14 criteria
are the requirements of “regular congregations” and
“regular religious services.” See Spiritual Outreach, 927
F.2d at 339; Am. Guidance, 490 F. Supp. at 306. Thus,
whether applying the associational test or the 14 criteria
test, courts have held that in order to be considered a
church under section 170, a religious organization must
create, as part of its religious activities, the opportunity
for members to develop a fellowship by worshipping
together. See Church of Eternal Life, 86 T.C. at 924 (“A
church is a coherent group of individuals and families
that join together to accomplish the religious purposes of
mutually held beliefs. In other words, a church’s principal
means of accomplishing its religious purposes must be to
assemble regularly a group of individuals related by
common worship and faith.”).
9 FOUNDATION OF HUMAN v. US
The Foundation asserts that a religious organization
should be treated as a church under section 170 as long as
“there is a body of followers beyond the scope of a ‘family
church’ . . . [who] seek the teachings of the organization
and express or acknowledge an affiliation with its reli-
gious tenets.” However, every religious organization has
members who express an affiliation with the organiza-
tion’s tenets. For that reason, the Foundation’s approach
is at odds with the generally accepted principle that
Congress intended a more restricted definition for a
“church” than for a religious organization, especially in
light of case law interpreting section 170 to require more
than mere affiliation by a number of people with an
organization espousing a particular belief system. See,
e.g., Spiritual Outreach, 927 F.2d at 339; VIA, 68 T.C.M.
(CCH) 212.
Therefore, in order to qualify as a church under sec-
tion 170, the Foundation was required to establish that it
met the associational test during the years at issue. 3 The
trial court held that the Foundation failed to carry that
burden. For the reasons given below, we agree with the
court’s conclusion.
III
The Foundation does not dispute that it had the bur-
den to establish that the IRS’s revocation was erroneous.
See St. Matthew Publ’g v. United States, 41 Fed. Cl. 142,
145-46 (1998); see also Visible Intelligence, 4 Cl. Ct. at 65.
The trial court held that the Foundation failed to satisfy
that burden because it did not establish that it held
regular services with a regular congregation during the
3 Because the IRS ruled that the Foundation quali-
fied as a “religious organization” for purposes of I.R.C. §
501(c)(3), the Foundation did not need to establish the
sincerity or legitimacy of its religious beliefs.
FOUNDATION OF HUMAN v. US 10
years at issue and because its “electronic ministry” did
not satisfy the associational test. The Foundation chal-
lenges the trial court’s rulings on both of those issues.
A
With respect to the Foundation’s in-person services,
the record shows that during the three-year audit period
at issue the Foundation did not hold regular services at
any location, including its facility at the Tall Timber
Ranch in Selma, Oregon. During that period, the Foun-
dation held 21 seminars in various locations throughout
the United States, five of which took place at the Tall
Timber Ranch. We agree with the government that the
evidence regarding the seminars does not establish that
the Foundation conducted regular meetings or had a
regular congregation and therefore does not satisfy the
associational test. First, the attendance of groups of
people at occasional seminars in cities scattered across
the country does not constitute a regular assembly of a
cohesive group of people for worship. Second, as for the
seminars at the Tall Timber Ranch, the Foundation has
not shown that those five meetings in a three-year period
enabled congregants to establish a community of worship.
While the associational test does not demand that reli-
gious gatherings be held with a particular frequency or on
a particular schedule, it does require gatherings that, by
virtue of their nature and frequency, provide the opportu-
nity for members to form a religious fellowship through
communal worship. See Spiritual Outreach, 58 T.C.M.
(CCH) at 1287 (evidence of 20 meetings over two years
comprising “music festivals and revivals . . . involving
principally gospel singing . . . and gatherings for individ-
ual meditation and prayer by persons who do not regu-
larly come together as a congregation for such purposes”
did not establish “the cohesiveness factor which we think
is an essential ingredient of a ‘church’”). The Foundation
11 FOUNDATION OF HUMAN v. US
has failed to show that the sporadic meetings conducted
in various locations were sufficiently regular to satisfy
that requirement. Moreover, the Foundation has pre-
sented no evidence regarding attendance or any other
indication that a regular congregation gathered even for
those occasional meetings during the three-year period at
issue.
The Foundation points to a number of letters from in-
dividuals stating that they had received the Foundation’s
teachings and considered the Foundation to be their
church. However, that evidence does not identify those
who attended in-person meetings as opposed to those who
received the Foundation’s teachings through its electronic
ministry. The evidence of attendance at Foundation
meetings or services is thus insufficient to satisfy the
associational test because it does not establish the fre-
quency or nature of the meetings, the consistency of the
congregation, or the extent to which those meetings
enabled members to associate with each other in worship.
In sum, the record supports the trial court’s finding
that the in-person services conducted during the years in
question were merely incidental to the Foundation’s
primary purposes, and were therefore insufficient to
demonstrate that the Foundation was a “church” for tax
purposes. See Foundation I, 88 T.C. at 1357 (“When
bringing people together for worship is only an incidental
part of the activities of a religious organization, those
limited activities are insufficient to label the entire or-
ganization a church.”). Accordingly, we uphold the trial
court’s decision on that issue.
B
With respect to its “electronic ministry,” the Founda-
tion asserts that its members regularly assembled to
FOUNDATION OF HUMAN v. US 12
worship as a “virtual congregation” by listening to ser-
mons broadcast over the radio and the Internet at set
times, referred to as “appointments to listen.” However,
disseminating religious information, whether through
print or broadcast media, does not fulfill the associational
role required to qualify as a “church” under section 170.
See First Church of In Theo, 56 T.C.M. (CCH) 1045; VIA,
68 T.C.M. (CCH) 212; Church of Eternal Life, 86 T.C. at
921; see also Foundation I, 88 T.C. at 1360. The fact that
all the listeners simultaneously received the Foundation’s
message over the radio or the Internet does not mean that
those members associated with each other and worshiped
communally. As the trial court observed, “[t]here is no
evidence . . . that [the Foundation’s] adherents regard
their experience while listening to [the Foundation’s]
broadcasts as a shared experience with other . . . follow-
ers, or as a communal experience in any way.” Founda-
tion II, 88 Fed. Cl. at 232.
The Foundation argues that it satisfied the associa-
tional test because its electronic ministry included a “call-
in” show that enabled individuals to call and interact with
the Foundation’s clergy over the telephone. Those con-
versations, according to the Foundation, were broadcast
to listening congregants and subsequently transcribed for
distribution. However, a call-in show, like other forms of
broadcast ministry, does not provide individual congre-
gants with the opportunity to interact and associate with
each other in worship, and it therefore does not provide a
basis for concluding that the Foundation’s religious activi-
ties satisfied the associational test.
The Foundation relies on Purnell v. Commissioner, 63
T.C.M. (CCH) 3037 (1992), for the proposition that its
broadcasting activities qualified it as a “church without
walls.” In Purnell, however, the court found that the
organization in question had regular congregations and
13 FOUNDATION OF HUMAN v. US
regular services. The fact that the organization also
served an irregular congregation by operating in part as a
“street church” did not diminish its standing as a church
under section 170. Under Purnell, if an organization
holds regular services with a regular congregation, it
satisfies the associational test even if it also undertakes
other activities, such as broadcasting, that would not
qualify under the associational test if considered alone.
See Foundation I, 88 T.C. at 1357. In this case, by con-
trast, the Foundation has not established that it held
regular services with a regular congregation. Purnell
therefore provides no support for the Foundation’s argu-
ment.
Because the Foundation failed to establish that, dur-
ing the three-year period at issue, it qualified as a
“church” within the meaning of I.R.C. § 170, we uphold
the trial court’s decision sustaining the IRS’s ruling.
Each party shall bear its own costs for this appeal.
AFFIRMED