Local Habitat for Humanity Chapter Sues National Office — Commerciality Doctrine implicitly raised

The New York Times reports this morning that Habitat for Humanity San Antonio, Inc. has filed a federal lawsuit against Habitat for Humanity, Inc (“HFHI”).  According to the 27 page complaint, HFHI is seeking to coerce local chapters to sign an “onerous” and “overreaching” franchise agreement.  In the past, HFHI has only required affiliates to sign a simple two page “covenant”.  The new agreement imposes a requirement that local affiliates “tithe” 10% of their revenues to HFHI — the San Antonio office alleges that this requirement will result in ten fewer houses being built for needy beneficiaries.  The complaint is interesting from a tax law perspective because it alleges that HFHI has abandoned its Christian principles in favor of “lucrative commercial franchising” profits.  That allegation will likely catch the eye of the folks at TE/GE.  The complaint seems to raise the “commerciality doctrine” without actually using the phrase.  This will be interesting.  In the meantime, if any of our good readers knows how to get a copy of the agreement at the heart of the suit, please email me asap.  I’d like to post it here.

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