T.C. Memo. 2007-49
UNITED STATES TAX COURT
FAMILIES AGAINST GOVERNMENT SLAVERY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23936-05X. Filed March 5, 2007.
Percy Roy Matthews II (an officer), for petitioner.
Mark A. Weiner, for respondent.
MEMORANDUM OPINION
SWIFT, Judge: This is an action for section 7428
declaratory relief relating to respondent’s denial of
petitioner’s request for recognition as a section 501(c)(3) tax-
exempt organization.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 2005, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
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Background
The administrative record was submitted to the Court under
Rule 217(b)(1).
On May 23, 2003, there were filed with the secretary of
state of the State of California on petitioner’s behalf articles
of incorporation as a California nonprofit public benefit
corporation.
In petitioner’s articles of incorporation, petitioner’s
corporate purpose is stated to be the education of the public
about “injustices to minority [A]mericans” and about “peacefully
fight[ing] for freedom.”
On June 16, 2003, there was filed with the Franchise Tax
Board of the State of California an application on petitioner’s
behalf for exemption from California income tax. On the
application, petitioner’s primary purpose is described as public
education.1
On September 5, 2003, petitioner mailed to respondent a Form
1023, Application for Recognition of Exemption under Section
501(c)(3) of the Internal Revenue Code. On its Form 1023,
petitioner’s primary purpose is described generally as follows:
To expose slavery and make freedom, liberty, and
justice truly meaningful for all.
1
The record does not indicate whether petitioner’s
application for exemption from California income tax was granted.
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As described in the documents petitioner submitted to
respondent, petitioner’s activities consist primarily of public
protests or demonstrations that are made solely by petitioner’s
founder, Mr. Matthews, in order to educate the public as to the
alleged slavery and entrapment of Hollywood celebrities by
Government officials.2
Language in the documents that Mr. Matthews distributes to
the public at the referred-to demonstrations alleges that the
Federal Bureau of Investigation kidnaps Hollywood celebrities and
that law enforcement personnel and private gangs are joined in a
conspiracy to kill, trap, and enslave Hollywood celebrities and
minorities “to gain more financial support” and to engage in
activities that petitioner describes as “blood sport”. Language
in petitioner’s documents also alleges that Government-sponsored
welfare and housing programs force minority women to participate
in the above alleged conspiracy.
From January 30 to March 10, 2004, respondent’s exempt
organizations specialist made a number of requests of petitioner
for evidence supporting the above conspiracy allegations. The
documents petitioner submitted to respondent, however, contain
2
In the documents submitted to respondent and distributed to
the public, petitioner utilizes repeatedly and without permission
the names of Hollywood celebrities. To protect the privacy of
these celebrities and because their names are irrelevant to our
opinion, we do not identify their names.
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only irrelevant, unintelligible, and inflammatory statements,
nonsensical distortions, and irrelevant photographs.3
On August 4, 2004, respondent’s Exempt Organizations
Division mailed to petitioner a proposed denial of petitioner’s
requested tax-exempt status, concluding that petitioner had not
established that petitioner operates exclusively for educational
or any other exempt purpose.
On August 30, 2004, petitioner requested a hearing with
respondent’s Appeals Office relating to the proposed denial of
petitioner’s tax-exempt status.
From September 2004 to September 2005, respondent’s Appeals
Office gave petitioner the opportunity to submit additional
documents relating to the alleged conspiracy that formed the
content of petitioner’s purported educational activities.
Petitioner, however, only submitted additional documents similar
to the documents petitioner had earlier submitted to respondent.
In total, petitioner submitted to respondent more than 1,000
pages of documents consisting largely of nonsensical, emotionally
charged, and incomprehensible allegations.
On September 22, 2005, respondent’s Appeals Office mailed to
petitioner a final denial of petitioner’s requested tax-exempt
3
For example, documents petitioner submitted assert that
because a church located in the neighborhood of the home of
Mr. Matthews placed the title of a sermon, “Dead Man Walking,” on
its church marquee, someone was trying to threaten the life of
Mr. Matthews.
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status under section 501(c)(3). Respondent concluded that
petitioner sought to present to the public only unsupported
opinions of Mr. Matthews.
On December 19, 2005, petitioner filed with the Court a
petition requesting section 7428 declaratory relief as to
petitioner’s tax-exempt status under section 501(c)(3).
Discussion
In reviewing under section 7428 respondent’s denial of an
organization’s application for initial qualification for section
501(c)(3) tax-exempt status, we ordinarily review only the
administrative record. Rule 217(a); Natl. Association of Am.
Churches v. Commissioner, 82 T.C. 18, 19-20 (1984).
To qualify for Federal income tax-exempt status under
section 501(c)(3) as an educational organization, an organization
must, among other things, operate exclusively for educational
purposes (operational test). Sec. 1.501(c)(3)-1(a), Income Tax
Regs.
To meet the operational test, an organization must further
educational purposes and not further substantial nonexempt
purposes. Nationalist Movement v. Commissioner, 102 T.C. 558,
576 (1994), affd. 37 F.3d 216 (5th Cir. 1994); sec. 1.501(c)(3)-
1(c)(1), Income Tax Regs.
Educational purposes include activities that instruct or
train individuals to improve or develop their capabilities and
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that instruct the public on subjects useful to individuals and
beneficial to the community. Am. Campaign Acad. v. Commissioner,
92 T.C. 1053, 1064 (1989); sec. 1.501(c)(3)-1(d)(3)(i), Income
Tax Regs. Educational purposes do not include activities
principally involving the presentation of unsupported opinion.
Sec. 1.501(c)(3)-1(d)(3)(i), Income Tax Regs.
In determining whether an opinion is unsupported, respondent
primarily examines the method used to develop the opinion. In
Rev. Proc. 86-43, sec. 3.03, 1986-2 C.B. at 730, respondent
identifies four factors to be considered in evaluating whether an
opinion is to be regarded as unsupported, as follows:
(1) Whether viewpoints or positions taken are
factually unsupported;
(2) Whether facts are distorted;
(3) Whether inflammatory and disparaging material is
utilized based more on strong emotional feelings
than on objective evaluations; and
(4) Whether the organization fails to provide
background information that would allow the public
to understand and to evaluate the material.4
4
In 1980, the Court of Appeals for the D.C. Circuit held
that respondent’s definition of “educational” as found in sec.
1.501(c)(3)-1(d)(3)(i), Income Tax Regs., was unconstitutionally
vague. Big Mama Rag, Inc. v. United States, 631 F.2d 1030, 1039-
1040 (D.C. Cir. 1980). Three years later, the Court of Appeals
for the D.C. Circuit upheld respondent’s denial of an
organization’s requested tax-exempt status in which respondent
had used certain factors in applying sec. 1.501(c)(3)-1(d)(3)(i),
Income Tax Regs. Natl. Alliance v. United States, 710 F.2d 868,
874-876 (D.C. Cir. 1983). In Rev. Proc. 86-43, 1986-2 C.B. 729,
(continued...)
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The documents that petitioner presents to the public through
Mr. Matthews are full of unsupported opinions and distorted
facts. Petitioner’s presentations and documents use inflammatory
language and emotional and irrelevant statements. Factors one,
two, three, and four of Rev. Proc. 86-43, supra, clearly apply to
the activities of petitioner.
Because petitioner’s activities appear principally to
involve the presentation to the public of unsupported opinions,
petitioner’s activities do not further educational purposes under
the operational test. On the record before us, petitioner does
not qualify for tax-exempt status under section 501(c)(3) as an
educational organization.
Even apart from the criteria of Rev. Proc. 86-43, supra,
petitioner’s activities do not qualify as educational under the
generally accepted use of that term. See Natl. Alliance v.
United States, 710 F.2d 868, 873, 875 (D.C. Cir. 1983).
Petitioner’s vague claims for qualification as a section
501(c)(3) tax-exempt organization on the grounds that it operates
for charity and for the prevention of cruelty to children
4
(...continued)
respondent set forth the factors that respondent had utilized in
Natl. Alliance. See Chief Counsel Advice 200620001 (May 9,
2006).
The Tax Court has held that Rev. Proc. 86-43, supra, is
constitutional. Nationalist Movement v. Commissioner, 102 T.C.
558, 588-589 (1994), affd. on other grounds 37 F.3d 216, 218 (5th
Cir. 1994).
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similarly are totally unsupported by the record herein. Further,
petitioner acknowledges in its application for section 501(c)(3)
tax-exempt status that petitioner would engage in legislative and
political activities generally not allowed for section 501(c)(3)
organizations. Sec. 1.501(c)(3)-1(c)(3)(i), (ii), and (iii),
Income Tax Regs.
Petitioner argues that, by deciding the issue before us only
on the administrative record, we prevent petitioner from
submitting additional evidence in support of petitioner’s tax-
exempt activities.
Both respondent’s Exempt Organizations Division and
respondent’s Appeals Office informed petitioner of the types of
evidence that might satisfy the requirements of Rev. Proc. 86-43,
supra, and petitioner had more than ample opportunity to submit
whatever evidence it had available. Petitioner instead chose to
submit to respondent more than 1,000 pages of incomprehensible
documents. On the record before us, it is reasonable to hold
petitioner to the administrative record. Petitioner has not
shown good cause for doing otherwise. See Rule 217(a).
We sustain respondent’s denial of petitioner’s request for
tax-exempt status.
Decision will be entered
upholding respondent’s
determination.