SAFE SPACE: A Meteorite Heading Straight for Civil Society
Jack Cummings has an interesting take on SAFE SPACE in yesterday’s Tax Notes (subscription required). That guy is as much constitutional as as he is tax scholar. His prodigious book about the Supreme Court’s tax jurisprudence is proof enough. More importantly, his years of reading Supreme Court tax tea leaves bolsters his not-at-all subtle assertion that SAFE SPACE will inevitably end up at the Supreme Court. The article is behind a pay wall so I have excerpted just a few paragraphs of this good read below the fold.
It’s hard to say exactly, but I don’t think Jack likes the idea of tax benefits for political activity. His article situates the constitutional and tax exemption issues in the context of the Tax Code’s broader denial of subsidies for political spending. SAFE SPACE might even have implications for other provisions generally denying tax deductions for political spending.
The last line of his article is unsettling. It makes me think that SAFE SPACE’s challenge is like a huge, powerful and unmoored meteorite heading for earth. Jack thinks its impact could be devastating, like in the Bruce Willis movie. But he points out that the meteorite might be built on a rickety factual foundation that ought to be stress tested, and maybe by that approach knocked out of the sky before impact. That’s probably what Bruce Willis would do. Here is Jack’s dark warning:
The Moore case required between four and five years to reach a Supreme Court decision. The SAFE SPACE case could proceed either faster or slower. The petitioner might try some novel method of speeding up the process by claiming to be under unreasonable duress lacking the exemption. But the IRS, hopefully assisted by the Justice Department and whatever resources they all can muster, should fight this petition with the same scorched earth vigor that other defendants have applied in recent years. For example, the petition makes many factual assertions that should be probed. Depositions should be taken. Records should be examined. Be wary of stipulations.
The government should know that the entire superstructure of charitable organization law is on the line with this case, and the Supreme Court will not shrink from hearing the appeal.
Well. Yippie Ki-Yay.
darryll k. jones
. . .
Governmental subsidization of points of view, religious organizations, or other groups remains a confused issue, but one of growing importance. One of the most recent citations to TWR appears in a 2013 opinion rejecting a requirement that an organization adopt a policy that amounts to forced speech as a condition to receipt of federal money. It distinguished TWR because the exemption requirements did not require the organization to say anything and the law provided an alternative means of making the desired speech. It likened the exemption to a “cash grant” and said Congress was not required to subsidize free speech. That has been the accepted basis for the lobbying and campaigning limits and has not been seriously tested in the modern Supreme Court.
If the Supreme Court finds facial or even substantive discrimination and harm to SAFE SPACE’s free speech as a violation of the First Amendment that cannot be explained by the [government is not required to subsidize] argument, the safety valve of the dual or triple organization structure will be the only remaining defense for section 501(c)(3). The petitioner argues that it cannot afford to, or should not be required to, set up affiliated section 527 and 501(c)(4) organizations to facilitate campaigning and lobbying. Just as the argument about costless web activities is intended to defuse the subsidization problem, this claim intends to make unavailable the safety valve that has played a role in upholding the speech limits on charities.
The key cite again is TWR. It ruled that denial of the exemption for lobbying was not unconstitutional in part because the section 501(c)(3) organization could set up an affiliated section 501(c)(4) organization to lobby with nondeductible dollars and because that structure was not unduly burdensome. A footnote said, “The IRS apparently requires only that the two groups be separately incorporated and keep records adequate to show that tax-deductible contributions are not used to pay for lobbying. This is not unduly burdensome.” TWR was not trying to campaign, and so its case did not consider affiliated campaign funds, but charities (or their organizers) commonly create not only affiliated social welfare organizations but also section 527 campaign funds. The role of the structuring alternative in the TWR ruling is not entirely clear. Was it a makeweight argument, or was it essential after finding that, yes, the limits are unconstitutional? The majority opinion did not rest on it; it rested on the lack of need to subsidize the speech. The concurrence joined by Blackmun, Brennan, and Marshall very much did rest on it. It said: “The constitutional defect that would inhere in section 501(c)(3) alone is avoided by section 501(c)(4).”