SAFE SPACE Not Ready for Prime Time (Voluntary Dismissal Without Prejudice)

Late last month the U.S. Tax Court agreed to a voluntary dismissal, without prejudice, of the Students and Academics for Free Expression, Speech, and Political Action in Campus Education, Inc. (SAFE SPACE) v. Commissioner section 7428 declaratory judgment case challenging the section 501(c)(3) prohibition on political campaign intervention on constitutional grounds. See the Tax Court Docket for the 11/26/24 opinion and 11/27/24 order. According to the opinion, the IRS and SAFE SPACE asked for the dismissal to “perfect” the administrative record before the IRS, including improving the factual record for any later Tax Court consideration. 

The key issue the court had to address was whether it could grant the dismissal without prejudice, as requested by the parties, especially given it is generally required in section 6213 petition cases to only dismiss with prejudice by sustaining the Commissioner’s determination. The court concluded that dismissal without prejudice of this section 7428 case was appropriate under the Federal Rules of Civil Procedure, and so agreed to the parties’ request. It remains to be seen if and when the case returns to Tax Court.

Lloyd Mayer