Alexander v. "Americans United" Inc.

*754Mr. Justice Powell

delivered the opinion of the Court.

Respondent is a nonprofit, educational corporation organized under the laws of-the District of Columbia as “Protestants and Other Americans United for Separation of Church and State.” Its purpose is to defend and maintain religious liberty in the United States by the dissemination of knowledge concerning the constitutional principle of the separation of church and State. In 1950, the Internal Revenue Service issued a ruling letter that respondent qualified as a tax-exempt organization under the predecessor provision to § 501 (c) (3) of the Internal Revenue Code of' 1954 (the Code), 26 U. S. C. § 501 (c) (3).1 As a result, the Service treated contributions to respondent as charitable deductions under the predecessor provision of § 170 (c) (2) of the Code, 26 U. S. C. § 170 (c)(2).2 This situation continued unchanged until *755April 25, 1969, when the Service issued a ruling letter revoking the 1950 ruling on the ground that respondent had.violated §§ 501 (c)(3) and 170 (c)(2)(D) by devoting a substantial part of its activities to attempts to influence legislation. Shortly thereafter, the Service issued another ruling letter exempting respondent from income taxation as a “social welfare1’ organization under Code § 501 (c) (4), 26 U. S. C. § 501 (c) (4) .3 The effect of this change in status was to render respondent liable for unemployment (FUTA) taxes under Code § 3301, 26 U. S. C. § 3301,4 and to destroy its eligibility for tax-deductible contributions under § 170.

*756Because the 1969 ruling letter caused a substantial decrease in its contributions, respondent and two of its benefactors initiated the instant action in the United States District Court for the District of Columbia on July 30, 1970.5 They sought a declaratory judgment that the Service’s administration of the lobbying proscriptions of §§501 (c)(3) and 170 was erroneous or unconstitutional6 and injunctive relief requiring rein*757statement of respondent’s § 501 (c)(3) ruling letter. Because their objections to the Service’s action included a facial challenge to the constitutionality of federal statutes,7 they also requested the convening of a three-judge district court pursuant to 28 U. S. C. § 2282.

The Service moved to dismiss the action, principally on the ground that the exception in the Declaratory Judgment Act for cases “with respect to Federal taxes,” 8 and the_prohibition in the Anti-Injunction Act against suits “for the purpose of restraining the assessment or collection of any tax,”9 ousted the court of subject-*758matter jurisdiction. The District Court accepted this argument, refused to convene a three-judge court, and dismissed the complaint in an unpublished order filed March 9, 1971. The United' States Court of Appeals for the District of Columbia Circuit affirmed the dismissal insofar as it pertained to the individual plaintiffs, but it reversed as to respondent and remanded the case to the District Court with instructions to convene a three-judge court. “Americans United” Inc. v. Walters 155 U. S. App. D. C. 284, 477 F. 2d 1169 (1973). The Service petitioned for review, and. we granted certiorari. 412 U. S. 927 (1973). We reverse.

In our opinion in Bob Jones University v. Simon, ante, p. 725, we examined the meaning'of the Anti-Injunction Act and its interpretation in prior opinions of this Court, and we reaffirmed our adherence to the two-part test announced in Enochs v. Williams Packing & Navigation Co., 370 U. S. 1 (1962). To reiterate, the Court in Williams Packing únanimously held that a pre-enforcement injunction against the. assessment or collection of taxes may be granted only (i) “if it is clear that under no circumstances could the Government ultimately prevail . . . id., at 7; and (ii) “if equity jurisdiction otherwise exists.” Ibid. Unless' both conditions are met, a suit for preventive injunctive relief must be dismissed.

In the instant case the Court of Appeals-recognized Williams Packing as controlling precedent for responds ent’s individual coplaintiffs and affirmed the dismissal of the súit as to them. 155 U. S. App. D. C., at 292, 477 F. 2d, at 1177. The court held that the relief requested by the, individual plaintiffs “relate [d] directly to the assessment and collection of taxes” and that the allegations of *759infringements of constitutional rights were “to no avail” in overcoming the barrier of § 7421 (a). Id.; at 291, 477 F. 2d, at 1176. The court also recognized that respondent could not satisfy the Williams Packing criteria, id., at 298, 477 F. 2d, at 1183, but concluded that respondent’s suit was without the scope of the Anti-Injunction Act and therefore. not subject to the Williams Packing test.10

The court’s conclusion with regard to respondent rested on the confluence of several factors. One was the constitutional nature of respondent’s cláims. As the court noted, the thrust of respondent’s argument is not that it qualifies for a § 501 (c) (3) exemption under existing law but rather that that provision’s “substantial part” test and proscription against efforts to influence legislation are unconstitutional. Id., at 293, 477 F. 2d, at 1178. Obviously, this observation could not have beendispositive to the Court of Appeals, for this factor does not differentiate respondent, which was allowed to sue, from the individual coplaintiffs, who likewise pressed constitutional claims but who were dismissed from the action. Furthermore, decisions of this Court , make it unmistakably clear that the constitutional nature of a taxpayer’s claim, as distinct from its probability of success, is of no consequence under the Anti-Injunction Act. E. g., *760Bailey v. George, 259 U. S. 16 (1922); Dodge v. Osborn, 240 U. S. 118 (1916).

The other three factors identifiéd by the Court of Appeals are equally unpersuasive. . First, the court noted that respondent “does not seek in this lawsuit to enjoin the assessment or collection of its own taxes.” 155 U. S. App. D. C., at 292, 477 F. 2d, at 1177. Because respondent volunteered to pay FUTA taxes even if it obtained an injunction restoring its •§ 501 (c) (3) status, this observation, we may assume, is correct. It is also irrelevant. •Section 7421 (a) does not bar merely a taxpayer’s attempt to enjoin the collection of his own taxes. Rather, it declares in sweeping terms that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” 11 Thus a suit to enjoin the assessment or collection of anyone’s taxes triggers the literal terms of § 7421 (a). ■

Perhaps the real point of the court’s observation about respondent’s taxes was to ■ set the stage for its more pertinent conclusion that restraining the assessment or collection of taxes was “at best a collateral effect” of respondent’s action and that this suit arose “in a posture removed from a restraint on assessment or collection.” 155 U. S. App. D. C., at 294, 477 F. 2d, at 1179. We disagree. Under any reasonable construction of the statutory term “purpose,” the objective of this suit was to restrain the assessment and collection of taxes from respondent’s contributors. The obvious *761purpose of" respondent’s action was to restore advance assurance that donations to it would qualify as charitable deductions under § 170 that would reduce the level of taxes of its donors.12 Indeed, respondent would not be interested in. obtaining the declaratory and injunctive relief requested if that relief did not effectively restrain the taxation of its contributors. Thus , we think it circular to conclude, as did the Court of Appeals, that respondent’s “primary design’’ was not “to remove the burden of taxation from those presently contributing but rather to avoid the disposition of contributed funds away from the corporation.” Ibid. The latter goal is merely a restatement of the former and can be accomplished only by restraining the assessment and collection of a tax in contravention of § 7421 (a).

Finally, -the Court of Appeals emphasized that respondent had no “alternate legal remedy in the form of adequate refund litigation ....” Id., at 295, 477 F. 2d, at 1180. The court recognized, of course, that respondent does have an opportunity to litigate its claims in an action for refund of FUTA taxes but dismissed this alternative with the statement that “it is subject to certain conditions and, we feel, is so far removed from the mainstream of the action and relief sought as to hardly be considered adequate.” Id., at 294 n. 13, 477 F. 2d, at 1179 n. 13. The import of these comments is unclear. If they are. taken to mean that a refund action is, as a practical matter, inadequate to avoid the decrease in respondent’s contributions for the interim between the withdrawal of § 501 (c) (3) status and the final adjudication of its en*762titlement to that exemption, they are certainly accurate. This, however, is only'a statemént of irreparable injury, which is the essential prerequisite.for injunctive relief, under traditionál equitable standards and only one part of the Williams Packing test. As noted in Bob Jones, ante, at 745-746, allowing injunctive relief on the basis of this showing alone would render § 7421 (a), quite meaningless.

If, on the other hand, the court’s comments about the inadequacy of a refund action for FUTA taxes are .interpreted to mean that respondent lacks an opportunity to have its claims finally adjudicated by a court of law, we think they are inaccurate. Respondent’s liability for FUTA taxes hinges on precisely the same legal issue as - does its eligibility for tax-deductible contributions under § 170, namely its entitlement to § 501 (c)(3) status. And respondént will have a full opportunity to litigate the legality of the Service’s withdrawal of respondent’s §501 (c)(3) ruling letter in a refund suit following the payment of FUTA taxes. E. g., Christian Echoes National Ministry, Inc. v. United States, 470 F. 2d 849 (CA10 1972), cert. denied, 414 U. S. 864 (1973).13

*763We therefore conclude that there are no valid reasons to distinguish this case from Williams Packing for purposes of § 7421 (a) or to' exempt respondent’s suit from the dual requirements enunciated in that case.14 The judgment is reversed.

It is so ordered.

Mr. Justice Douglas took no part in the decision of this case.

The predecessor provision of Code §501 (c)(3) was-§101(6) of the Internal Revenue Code of 1939. Section 501 (c) (3) describes the following as organizations exempt from federal income taxes by-virtue of § 501 (a):

“Corporations, and any, community chest, fund, or foundation, organized and operated exclusively for religion’s, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (includifig the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”

The predecessor provision of § 170 (c) (2) of ther Code was § 23 (o) (2) of the Internal Revenue Code of 1939. Section 170 (c)(2) defines a “charitable contribution” for purposes of § 170 (a), the charitable deduction; provision, to mean a contribution or gift to or for the use of:.

“A corporation, trust, or community chest, fund, or foundation—
*755“(A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State, the District of Columbia, or'any possession of the United States; ■
“(B) organized and operated exclusively for religious, charitable; scientific, literary, or educational purposes or for the prevention of cruelty to children or animals;
“(C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and
“(D) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), .any political campaign on behalf of any candidate for public office.”

The differences between the requirements of §§501 (c)(3) and 170 (c) (2) are minor and are not involved in this litigation.

Section 501 (e)(4) lists the following organizations as qualifying under the §501 (a) exemption from federal income taxes:

. “Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to ■the employees of a designated person or persons in a particular municipality,- and the net earnings of- which are devoted exclusively to charitable, educátional, or recreational purposes.”

See Code §3306 (c)(8), 26 U. S. C. §3306 (c)(8). Respondent began paying' FUTA taxes in February 1970 and has stated its willingness to continue to do so in light of its relatively insubstantial *756liability for such taxes. The Service reports that respondent paid $981.13 in FUTA taxes for the year Í969, $1,052.60 for 1970, $889.09 for 1971, and $1,131.36 for 1972. Brief for Petitioner 4 n. 2.

Ordinarily, respondent’s shift from §501 (c)(3) status to §501 (c)(4) status would also have meant that it would become subject to federal social security (FICA) taxes, since § 501 (c) (3) organizations are exempt from such taxes but § 501 (c) (4) organizations are not. Code § 3121 (b) (8) (B), 26 U. S. C. § 3121 (b) (8) (B). This distinction is not involved here’, however, because respondent in prior ’ years voluntarily elected to pay FICA taxes although it held § 501 (c) (3) status. This election had been in effect for more than eight years, which rendered respondent incapable of terminating its election to pay FICA taxes even if it had retained its §501 (c)(3) status. Code §3121 (k)(l)(D), 26 U. S. C. §3121 (k)(l)(D).

Federal jurisdiction, was founded on 28 U. S. C. §§1331 and 1340 and on § 10 of the Administrative Procedure Act, now 5 U. S. C. §§ 701-706.

The amended complaint identified five claims: (1) that the lobbying proscriptions of §§ 501 (c) (3) and 170 (c) (2) (D) and the Service’s administration of them were unconstitutional due to the restrictions imposed on the exercise of First Amendment rights of political advocacy by respondent and its contributors; (2) that the “substantial part” test of these provisions denied equal protection of the laws in conflict with the Due Process Clause of the Fifth Amendment, by allowing large tax-exempt organizations to engage in a greater quantum of lobbying activity than is. allowed to smaller organizations; (3) that this disparity in the absolute amounts of lobbying activity allowed large and small § 501 (c) (3) organizations enabled certain large churches to engage in more lobbying in favor of government aid to church schools than respondent could bring to *757bear in opposition, thereby violating the plaintiffs’ rights under the Establishment and Free Exercise Clauses of the First Amendment; (4) that the statutory standards of “substantial part” and “propaganda” were so lacking in specificity that they constituted an invalid delegation of legislative power to the Service; and (5) that the Service acted arbitrarEy and capriciously in revoking respondent’s § 501 (c)(3) exemption. The last two contentions apparently were not advanced in the Court of Appeals. There the argument centered on the.“discriminatory” aspects of the “substantial part” test identified above as claim (2).

Specifically, respondent and its coplaintiffs sought to have the exemption clauses of § 501 (c) (3) severed from the remainder cf that section and declared unconstitutional.

The federal tax exception to the Declaratory Judgment Act .appears in 28 U. S. C. § 2201:

“In a case of actual controversy within its jurisdiction, except with respect to Federal taxes, any court of thé United States, upon the filing of an appropriate pleading, may -declare the rights, and other legal relations of any interested party seeking such declaration, whether or not relief is or could bé sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.” (Emphasis added.)

The Anti-Injunction Act (Income Tax Assessment) is set forth in Code § 7421. (a), 26 U. S. C. § 7421 (a):

“Except as provided in sections 6212 (a) and (c), 6213 (a), and 7426 (a) and (b)(1), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court *758.by any person, -whether, or not such person is the person against' whom such tax was assessed.”-

None of the exceptions is relevant to this case.

The Court of Appeals also held that the scope of the “except with respect to Federal taxes” clause of the Declaratory Judgment Act, see n. 8,' supra, is coterminous with the Anti-Injunction Act ban against suits “for the purpose of restraining the assessment or collection of any tax” despite the broader phrasing of the former provision. 155 U. S. App. D. C. 284, 291, 477 F. 2d 1169, 1176. While we take no position on this issue, it is in any event clear that the federal tax exception to the Declaratory Judgment Act is at least as broad as the prohibition of the Anti-Injunction Act. Because we hold that the latter Act bars the instant suit, there is no occasion to deal separately with the former. See Bob Jones University v. Simon, ante, at 732-733, n. 7.

The portion of § 7421 (a) beginning with “by any person” was addéd to the Act in 1966. See Bob Jones University v. Simon, ante, at 731-732, n. 6. As we noted there, however, the “by any person” phrase reaffirms the plain meaning of the original language of the Act.

Alternatively, this suit was intended to reassure private foundations that they could make contributions to respondent without risk of tax liability under Code § 4945 (d) (5), 26 U. S. C. § 4945 (d) (5). In this respect, the purpose of this action was to restrain the assessment of taxes against such foundations.

That respondent has voluntarily paid FUTA taxes rather than challenging their imposition via a refund suit does not alter this conclusion. A taxpayer cannot render an available review procedure an inadequate remedy at law by voluntarily forgoing it. See Graham v. Du Pont, 262 U. S. 234 (1923).

It should also be noted' that this case cannot be distinguished from Bob Jones, ante, p.- 725, on the ground that petitioner in that case in theory will be subject to federal income faxes upon termination of its §501 (c)(3) status, whereas respondent in this case will not, given that it has established § 501 (c) (4) status. Refund suits for federal income taxes and for FUTA (or FICA) taxes are fungible in the present context. So long as the imposition of a federal tax, without regard to its nature, follows 'froim the Service’s withdrawal of § 501 (c) (3) status, a refund suit following *763the" collection of that tax is an appropriate vehicle for litigating the legality of the Service’s actions iinder §501 (c)(3). As noted in Bob Jonesl ante, at 748 n. 22, we.need not decide now the range of remedies available, in such a refund suit, which,- unlike this suit, is brought pursuant to congressiónalfy authorized procedures.

We think our reading of § 7421 (a) is compelled by the language and apparent congressional purpose uf this statute. The consequences of the present regime for §’501 (c)(3) organizations can be harsh indeed, as Mr, Justice Blackmun ably articulates in his dissenting'opinion today. As we noted in Bob Jones, ante, at 749-750, this may well be a subject meriting congressional consideration.