Case: Treasury Regulation and IRS Revenue Ruling Used to Deny Taxpayer’s Application for Tax-Exempt Status Are Unconstitutionally Vague (D.D.C.) (IRC §501(c)(4))

The IRS’s denial of a tax exemption application was based on unconstitutionally vague standards susceptible to discriminatory enforcement, a district court held, granting in part and denying in part Taxpayer’s motion for summary judgment and denying the IRS’s cross-motion. Taxpayer, a nonprofit advocacy organization, applied for tax-exempt status under I.R.C. §501(c)(4) but was denied by the IRS because it determined that Taxpayer engaged in too much political campaign intervention, based on the requirements of Treas. Reg. §1.501(c)(4)-1 and the facts-and-circumstances test set forth in IRS Revenue Ruling 2004-06. The court found that the IRS’s “primary activity” test for determining how ...